MetaTrader Indicators

Andrew’s Pitchfork is invented by the well-known and celebrated market master, Dr. Alan Hall Andrews. This is a technical indicator that can be used by forex traders as well as those that are involved in the other markets. It can help a trader identify and measure the general cycles that have an effect on the fundamental market activities. There are two different applications in which you can make use of the indicator on your trading technique. These are the approaches in which you can trade within and outside the lines.

By Definition

Before we tackle the two approaches, it is vital that you know first what Andrew’s Pitchfork is. Basically, this is called the median line studies and is similar to the support and resistance indicator. The inventor of this believed that the price of the currency in the forex market would descend to the median line almost eighty percent of the time. The remaining 20% is for the change or the fluctuations in the outlook accounting. Thus, the theory states that whether there are changes in the market trend, the overall market performance will remain unaffected. To know that the current trend will be replaced by a new one, the supply and demand elements will shift and the prices of the currencies will drift. These situations are the key to finding the trading opportunities for beginner and experienced forex traders. If you want to increase your chances of getting accurate trades, the Andrew’s Pitchfork indicator will help you win your game.

The Application

Before you use this technical indicator, you are required to classify the highs and lows that appeared on the chart. Now, draw the pivot at the peak and label it. After the pivot, you will need to make out the trough and the peak, which are both at the right side of the pivot. You have now isolated the high and low with the pivot point. This time, you can place the application. It all begins at the first pivot point, which is also the median line. The peak and the trough will be the support and resistance for the trend of the market.

The Two Approaches

As previously stated, there are two approaches which can be applied for the Andrew’s Pitchfork technical indicator. The first one is to trade within the lines. To profit from this strategy, you will need to understand how exactly it works. For instance, your currency pair is USD/GBP and in the indicator, it shows that it has moved away from the median line towards the pitchfork’s top resistance. Considering these indications, a trader will only benefit from it if he places an entry at the uppermost part of the signal line. Of course, rigorous money management will always help along with a correct stop loss strategy. Even as the price of the currency moves toward the median line once again, the momentum will remain downward. This means that there is a great chance of getting close to a profitable position of 1000 pips during the trading process.

On the other hand, to trade outside the lines is yet another approach that you can apply using the technical indicator. Although this is less recurrently used, they are most considered for long term trends. This is a little bit more complicated than the other approach. You have to understand that the theory here states that the price action will descend to the median line but it can also be assumed that the market has decided that there will be a new trend coming. This can lead to losses on the trader’s part. To avoid this, you can add parameters to secure the retracements and close your position early.