The Three Pole Butter Worth Filter indicator for Metatrader 5 is a true trend follower that enables traders to enter and exit trades in the most favorable trend direction.
This indicator is presented as a single magenta-colored line on the chart.
The buy/sell trade signals are clear and work as follows:
- Price action above the line is bullish and generates a buy trade opportunity.
- Price action below the line is bearish and generates a sell trade opportunity.
Customization options for the indicator include adjusting the period, horizontal shift, and line color.
For scalpers and day traders who utilize the M1 and M5 charts, the following tips can prove valuable:
- Prefer currency pairs with narrower spreads when using the Three Pole Butter Worth Filter indicator.
- Short-term traders can benefit from the more frequent trading opportunities offered during the London and New York trading sessions.
To ensure a thorough comprehension of the indicator’s functionality, we strongly recommend testing it in a demo environment before implementing it in live trading.
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threepolebutterworthfilter.mq5 Indicator (MT5)
Chart Example GBPUSD M30
Here is how the Three Pole Butter Worth Filter indicator appears when applied to the MT5 chart.
How To Buy And Sell Using The Three Pole Butter Worth Filter Indicator?
Find a simple trading example below:
Buy Signal
- A buy signal is confirmed when the candle closes above the magenta line from below.
- Open a buy trade and place your stop loss below the most recent swing low support level.
- Either close the buy trade when the candle closes back below the magenta line, or exit the trade for a fixed take profit target.
Sell Signal
- A sell signal is confirmed when the candle closes below the magenta line from above.
- Open a sell transaction and place your stop loss above the most recent swing high resistance level.
- Either close the sell trade when the candle closes back above the magenta line, or exit the trade for a fixed take profit target.
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threepolebutterworthfilter.mq5 Indicator (MT5)
MT5 Trading Strategy: Smooth Trend Filtering with Forex Trendy Confirmation
This strategy uses the Three Pole Butter Worth Filter Indicator to smooth price data and filter out noise, combined with the Forex Trendy Indicator to identify the prevailing trend direction.
This approach helps traders enter trades aligned with strong, clean trends.
Indicators Used
- Three Pole Butter Worth Filter Indicator: Applies a Butterworth filter to reduce market noise and highlight true price trends.
- Forex Trendy Indicator: Detects and signals the current trend direction and strength.
Timeframes
Best applied on M30, H1, and H4 charts for both intraday and swing trading.
Buy Entry Rules
- The Three Pole Butter Worth Filter shows a smooth upward slope, indicating bullish momentum.
- The Forex Trendy Indicator signals a bullish trend.
- Enter a long trade when both indicators align, ideally at a minor pullback or confirmation candle close.
- Place a stop-loss below the recent swing low or below the filtered trend line.
- Set a take profit at the next resistance level or use a favorable risk-reward ratio (1.5 to 2).
Sell Entry Rules
- The Three Pole Butter Worth Filter shows a smooth downward slope, indicating bearish momentum.
- The Forex Trendy Indicator signals a bearish trend.
- Enter a short trade when both indicators align after confirmation.
- Set stop-loss above the recent swing high or above the filtered trend line.
- Target the next support level or apply risk-reward management.
Strategy Tips
- Use the Butterworth Filter to avoid false signals caused by market noise.
- Wait for both trend indicators to agree before entering a trade to increase probability.
- Consider higher timeframe trend confirmation for added confidence.
Conclusion
By combining the smoothing power of the Three Pole Butter Worth Filter Indicator with the trend clarity from the Forex Trendy Indicator, traders can effectively identify clean trend entries and reduce noise-driven false signals.
Frequently Asked Questions
How Do I Install This Custom Indicator On Metatrader 5?
- Open the MT5 trading platform
- Click on the File menu button located at the top left part of the platform
- Click on Open Data Folder > MQL5 folder > Indicators
- Copy the threepolebutterworthfilter.mq5 indicator file in the Indicators folder
- Close and restart the trading platform
- You will find the indicator here (Navigator window > Indicators)
- Drag the indicator to the chart to get started with it!
