The Bollinger Band forex scalping strategy is a strategy that is designed to measure short-term volatility in the currency market and translate this information into a very powerful profit making strategy.
In addition to this, scalping is well-suited for volatile markets, and this system will be exploiting such loopholes in the market.
Chart Setup
MetaTrader4 Indicators: ArrowsAndCurves.ex4 (Input Variable modified; SSP=12: Colors Width modified; #2=2, #3=2), Bollinger Bands.ex4 (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute
Recommended Trading Sessions: London, New York, Tokyo
Currency Pairs: Any pair with low spreads for maximum profits
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Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets displayed:
- If a blue upward pointing arrow of the ArrowsAndCurves.ex4 custom indicator aligns below the candlesticks as seen on Fig. 1.0, price is said to be pushing higher i.e. a signal to buy the asset of interest.
- If price opens and closes above the middle line of the of the Bollinger Bands and trades somewhat along the upper outer medium sea green band, whilst the bands widens, price is said to be pressured higher, thus a trigger to buy the pair of focus.
Stop Loss for Buy Entry: Place stop loss 2 pips below short-term trading support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following holds sway:
- If during a buy signal a red downward pointing arrow of the ArrowsAndCurves.ex4 custom indicator pop up above the candlestick, then it’ll be wise to recommend an exit or take profit.
- If the bands of the Bollinger Bands indicator contracts or narrows with price trading along the middle line of the bands during a bullish trend, volatility is said to be dropping, as such a reversal is said to be underway, hence an exit or take profit is advised.
Sell Entry Rules
Place a sell order if the following rules or conditions take precedence:
- If a red downward pointing arrow of the ArrowsAndCurves.ex4 custom indicator aligns above the candlesticks as shown on Fig. 1.1, the sentiment in the market is said to be somewhat bearish i.e. a signal to sell the currency of interest.
- If price opens and closes below the middle line of the of the Bollinger Bands and trades somewhat along the lower outer medium sea green band, whilst the bands widens, price is said to be pushed to the downside, thus a trigger to go short.
Stop Loss for Sell Entry: Place stop loss 2 pips above short-term trading resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following indicator or chart patterns take center stage:
- If a blue upward pointing arrow of the ArrowsAndCurves.ex4 custom indicator forms below the candlestick during a sell signal, then it’ll be wise to recommend an exit or take profit.
- If the bands of the Bollinger Bands indicator contracts or narrows with price trading along the middle line of the bands during a sell signal, volatility is said to be easing, as such a reversal is said to be underway, hence an exit or take profit is advised
Sell Trade Example
Fig. 1.1
Free Download
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About The Trading Indicators
The Bollinger Bands are made up of three bands with the outer bands being plotted as standard deviations away from the middle simple moving average band.
The indicator offers good clues on the state of volatility in the market.
The ArrowsAndCurves.ex4 custom indicator combines two Moving Averages formed in a channel pattern with a blue or red arrow to deliver buy and sell alerts respectively.