The extreme colored Stochastic indicator for MT4 is an improved version of the traditional Stochastic technical indicator.
This version gives you a lot of options that can be accessed from the inputs tab.
For instance, the overbought and oversold values can be changed (default, 20 and 80).
The indicator will start drawing a green line when the Stochastic indicator reaches the oversold area.
Likewise, the indicator will start drawing a red line when the Stochastic indicator reaches the oversold area.
The Stochastic indicator should be traded in agreement with the underlying trend for good results.
Combine with a trend-following indicator such as an exponential moving average, simple moving average, Bollinger Bands or ADMI.
Underlying trend up? Trade the oversold green Stochastic signals.
Underlying trend down? Trade the overbought red Stochastic signals.
Feel free to experiment with the different indicator’s inputs settings to suit your needs and preferences.
Free Download
Download the “colored-stochastic-indicator.ex4” MT4 indicator
Indicator Chart (GBP/USD M1)
The GBP/USD 1-Minute chart below displays the Extreme Colored Stochastic Metatrader 4 forex indicator in action.
Basic Trading Signals
Signals from the Extreme Colored Stochastic MT4 forex indicator are easy to interpret and go as follows:
Buy Signal: Open a buy trade when the Stochastic indicator turns back above the 20 value from below (oversold area). The underlying trend should be pointing upward.
Place a stop loss below support or use your own preferred SL method.
Sell Signal: Open a sell trade when the Stochastic indicator turns back below the 80 value from above (overbought area). The underlying trend should be pointing downward.
Place a stop loss above resistance or use your own preferred SL method.
Extreme Colored Stochastic + Moving Average Strength MT4 Scalping Strategy
This MT4 scalping strategy combines the Extreme Colored Stochastic and the Moving Average Strength indicator.
The stochastic identifies oversold (green line) and overbought (red line) conditions, providing reversal signals.
The Moving Average Strength confirms trend momentum with a green histogram for bullish conditions and red for bearish.
Using both together filters out weak trades and improves the probability of success on M5 and M15 charts.
Buy Entry Rules
- Wait for the Extreme Colored Stochastic green line to appear, indicating an oversold condition.
- Confirm the Moving Average Strength histogram is green, signaling bullish momentum.
- Enter a buy trade at the close of the confirming candle.
- Place a stop loss 8–15 pips below the recent swing low on M5 or 15–25 pips on M15.
- Set a take profit of 10–20 pips on M5 or 20–40 pips on M15, or trail with recent highs.
Sell Entry Rules
- Wait for the Extreme Colored Stochastic red line to appear, indicating an overbought condition.
- Confirm the Moving Average Strength histogram is red, signaling bearish momentum.
- Enter a sell trade at the close of the confirming candle.
- Place a stop loss 8–15 pips above the recent swing high on M5 or 15–25 pips on M15.
- Set a take profit of 10–20 pips on M5 or 20–40 pips on M15, or trail with recent lows.
Advantages
- Combines reversal signals with trend confirmation for higher accuracy.
- Works well on M5 and M15 charts for fast scalping.
- Helps avoid trading against momentum.
- Clear visual signals that are easy to interpret.
- Flexible take-profit options based on structure or fixed pips.
Drawbacks
- Requires quick execution to catch short-term reversals.
- Frequent monitoring is needed for scalping on M5.
Example Case Study 1
On EURUSD M5, the Extreme Colored Stochastic green line appeared after a pullback, indicating oversold conditions.
The Moving Average Strength histogram was green, confirming upward momentum.
A buy trade was entered at 1.1070 with a stop loss at 1.1060 (10 pips) and a take profit at 1.1085 (15 pips).
Price moved upward quickly, hitting the target within 5 candles for a +15 pip scalp.
Example Case Study 2
On GBPUSD M15, the Extreme Colored Stochastic red line appeared at an overbought level.
The Moving Average Strength histogram was red, confirming bearish momentum.
A sell trade was opened at 1.2885 with a stop loss at 1.2905 (20 pips) and take profit at 1.2865 (20 pips).
The pair declined steadily and reached the take profit after three candles, yielding +20 pips.
Strategy Tips
- Focus on currency pairs with clear volatility, such as EURUSD, GBPUSD, USDJPY, or AUDUSD, for more reliable scalping setups.
- Trade only when the histogram and stochastic signals appear together to reduce false entries.
- Use a small trailing stop to protect profits if the price continues in your favor after hitting the first target.
- Consider filtering trades based on the overall trend on higher timeframes like H1 to align with broader market direction.
- Avoid taking trades during overlapping news events or economic announcements to prevent sudden spikes from hitting stop losses.
Download Now
Download the “colored-stochastic-indicator.ex4” Metatrader 4 indicator
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart window indicator
Customization options: Variable (K period, slowing, D period, MA method, overbought, oversold, time frame, show arrows, show bars, alerts on, alerts email) Width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Daily, Weekly, Monthly
Type: oscillator
