The Magic Dots Forex Signal indicator for Metatrader 4 deploys a trend-following trade logic and delivers buy/sell dots on the chart.
The indicator pops up in the main MT4 chart window in the form of blue and red colored signal dots.
Buy & Sell Trade Example
- Go long when the blue signal dot gets printed on the chart.
- Go short when the red signal dot gets printed on the chart.
The Magic Dots Forex Signal indicator can be used for both trade entry and exit or as a confirmation signal filter for other strategies and systems.
The indicator works equally well on all currency pairs (majors, minors and exotic) and shows promising results if used correctly.
Free Download
Download the “Magic_dots_2_mtf_alerts.mq4” indicator for MT4
Indicator Chart (EUR/USD M15)
The picture below shows the Magic Dots Forex Signal mt4 indicator in action on the trading chart.
Trading Tips:
Feel free to use your own favorite trade entry, stop loss and take profit method to trade with the Magic Dots Forex Signal indicator.
As always, trade in agreement with the overall trend and practice on a demo account first until you fully understand this indicator.
Please note that even the best trading indicator cannot yield a 100% win rate over long periods.
Indicator Specifications & Inputs:
Trading Platform: Developed for Metatrader 4 (MT4)
Currency pairs: Works for any pair
Time frames: Works for any time frame
Trade Style: Works for scalping, day trading and swing trading
Input Parameters: Variable (inputs tab), color settings & style
Indicator type: Signals
Does the indicator repaint? No.
Scalping Strategy: Magic Dots Forex Signal & Ultimate Moving Average (MT4)
This scalping strategy combines the Magic Dots Forex Signal Indicator and the Ultimate Moving Average Indicator on MetaTrader 4 (MT4).
The Magic Dots indicator generates buy and sell signals using blue and red dots.
The Ultimate Moving Average confirms the trend: price above the MA indicates a bullish trend, and price below indicates a bearish trend.
This strategy works best on M1 and M5 charts and is suitable for currency pairs such as EUR/USD, GBP/USD, and USD/JPY.
Buy Entry Rules
- Wait for a blue signal dot to appear on the Magic Dots indicator.
- Confirm that the price is above the Ultimate Moving Average, indicating a bullish trend.
- Enter a buy trade at the close of the bar where both conditions are met.
- Set a stop loss below the recent swing low or a fixed number of pips (e.g., 10-15 pips).
- Set a take profit at a risk-to-reward ratio of 1:1.5 or exit when a red dot appears or the price closes below the MA.
Sell Entry Rules
- Wait for a red signal dot to appear on the Magic Dots indicator.
- Confirm that the price is below the Ultimate Moving Average, indicating a bearish trend.
- Enter a sell trade at the close of the bar where both conditions are met.
- Set a stop loss above the recent swing high or a fixed number of pips (e.g., 10-15 pips).
- Set a take profit at a risk-to-reward ratio of 1:1.5 or exit when a blue dot appears or the price closes above the MA.
Advantages
- Combines immediate entry signals with trend confirmation for more reliable trades.
- Visual signals are clear and easy to interpret, ideal for fast-paced scalping.
- Works effectively on M1 and M5 charts for intraday trading.
- Suitable for highly liquid currency pairs.
Drawbacks
- Scalping on M1 and M5 charts can be stressful and requires constant attention.
- Price spikes or market noise may trigger false signals, leading to small losses.
- The strategy may underperform during low liquidity periods, such as off-market hours.
- High-frequency trading increases exposure to spreads and commission costs.
- Not suitable for traders who cannot monitor charts continuously.
Case Study 1: EUR/USD M1 Buy
On the EUR/USD M1 chart, a blue signal dot appeared on the Magic Dots indicator while the price was above the Ultimate Moving Average.
A buy position was entered at 1.1070.
Stop loss was set at 1.1060 (-10 pips) and take profit at 1.1085 (+15 pips).
The trade reached the take profit level, yielding +15 pips.
Case Study 2: GBP/USD M5 Sell
On the GBP/USD M5 chart, a red signal dot appeared on the Magic Dots indicator while the price was below the Ultimate Moving Average.
A sell position was entered at 1.2825. Stop loss was set at 1.2840 (+15 pips) and take profit at 1.2810 (-15 pips).
The trade reached the take profit level, resulting in +15 pips.
Strategy Tips
- Focus on M1 and M5 charts for quick scalping opportunities.
- Trade major currency pairs like EUR/USD, GBP/USD, and USD/JPY for tighter spreads and better liquidity.
- Confirm the trend direction using the Ultimate MA before entering trades.
- Wait for candle close confirmation to avoid false signals from sudden spikes.
- Apply strict risk management, limiting trades to 1-2% of account balance.
- Consider combining with support and resistance levels to improve trade accuracy.
- Use trailing stops to secure profits during rapid price movements.
Download Now
Download the “Magic_dots_2_mtf_alerts.mq4” indicator for Metatrader 4
