Four Percent Model is one of forex technical indicator used in forex technical analysis. This Four Percent Model Indicator was used to measure and analyze market timing tool utilizing the weekly close of the Value Line Composite Index.

A buy signal is generated when the index rises four percent or more from the previous week. Similarly, a sell signal is indicated when the index falls four percent or more from the previous week.

It is a trend following tool designed to keep you in the market during major up moves and out (or short) during major down moves.The Four Percent Model was developed by Ned Davis and popularized in Martin Zweig’s book Winning on Wall Street.

A buy signal is generated when the index rises at least four percent from a previous value. A sell signal is generated when the index falls at least four percent. For example, a buy signal would be generated if the weekly close of the Value Line rose from 200 to 208 (a four percent rise). If the index subsequently rallied to 250 and then dropped below 240 (a four percent drop), a sell signal would be generated.