The Water Adder Explosion Trading Strategy is a perfect tool for traders who want their trade accuracy and profitability to better. This strategy, established on the core principles of volume trading, can serve you to find the best opportunities for entering and exiting within Forex, stocks, commodities, or any financial market. It can be supplemented with price action signals such as candlestick patterns and formations to enhance the accuracy levels of your trades.
This video will lead you through step-by-step how to spot the most profitable trading signals using the Water Adder Explosion Indicator. Once you go through this tutorial, you will be empowered to get into high-probability trades and optimize your trading strategy.
Overview of the Water Adder Explosion Indicator
The Water Adder Explosion Indicator is one of the volume-based indicators that represent the utmost advanced visualization of a balance of positive and negative trading volumes. It makes it easy to identify times when market entry is best suited and makes predictions about market trends upcoming. It suits Forex, stocks, crypto, or commodities traders, who perceive that trading volume plays a main role in movements of a market.
It shows three main components.
- Blue histograms: This will show accumulation and potential buying opportunities.
- Red histograms: Distribution is indicated, which means selling opportunity.
- Black explosion line: This suggests potential price surges or declines; hence, when to enter or exit.
Why Trading Volume Matters
Volume is important in trading because it helps one measure momentum and confirms trends. Without enough volume, markets do not have the “fuel” needed for clear and consistent price movement. Knowing about volume helps traders determine if the market is strong or weak. An increase in volume usually means a strong price movement in the same direction, while a decline in volume may indicate a possible reversal or consolidation.
How to Identify the Loudest Trends with Water Adder Explosion Indicator
Trading a trend successfully requires you to identify whether the market is trending or ranging. Trends trading is more effective if there is a clear upward or downward trend in the markets. A trend is usually determined by a series of higher highs and higher lows in an uptrend or a lower highs and lower lows in a downtrend.
Here’s how to use the Water Adder Explosion Strategy to identify the trending opportunities:
- Find the 20-period EMA: With the 20-period EMA being higher than the 50-period EMA, it means the trend goes up.
- Volume confirmation: The Water Adder Explosion Indicator should give you rising blue bars above the moving average for a buying opportunity, or red bars for a selling opportunity.
Water Adder Explosion Trading Strategy
To deploy the Water Adder Explosion Strategy effectively, follow these guidelines:
Set Up Your Indicators:
- Attach the Water Adder Explosion Indicator to your chart.
- Utilize the 20-period and 50-period EMA to monitor the market trends.
Monitor the Market Movement:
- If the 20-period EMA is above the 50-period EMA, then the volume bars should go blue, which means a buy.
- If the 20-period EMA is below the 50-period EMA, then the volume bars should turn red, indicating a sell.
Enter Your Trade:
- For a long position: Enter when the volume bars are blue and close higher than the average line.
- For a short position: Enter when the volume bars are red and close higher than the average line.
- Put in stop-loss orders depending on swing lows for entering longs or swing highs for entering shorts.
Triple your Accuracy with Price Action
To make the Water Adder Explosion Strategy more precise, combine it with the signals from price action, like candlestick and chart patterns. For instance:
- Trade long: Confirm buy signals using the Water Adder Explosion Indicator by a bullish engulfing candlestick pattern. Go into the trade once the next candle opens with the stop loss just below the nearest swing low.
- Trade short: Confirm sell signals with a bearish engulfing pattern. Enter the sell position when the next candle opens, placing a stop loss just above the nearest swing high.
Conclusion
The Water Adder Explosion Indicator is an advanced tool that, when used with price action patterns, can significantly improve your trading accuracy and profitability. By applying these strategies to any market, you can confidently enter high-probability trades and maximize your returns.