BBands Stochastic Forex Trading Strategy

Traders have been known to evolve diverse techniques that can allow them survive the storms present in the financial markets.

Those who fail to adapt their trading skills to these ever-changing market behavior will discover how bad things can get for them.

The main idea behind the BBands Stochastic forex trading strategy is to offer a well-designed system that can survive the market turmoil.

Its ability to be able to adapt to changing market conditions, means diverse traders can implement this.

Indicators like the Stochastic Oscillator and the Doda-BBands offer us authentic market directions in the form of overbought and over sold trade zones, along with spotting trend reversals respectively.

Chart Setup

MetaTrader4 Indicators: Doda-BBands.ex4 (Inputs Variable Modified; Nbars=1000000), Stochastic Oscillator.ex4 (Inputs Variable Modified; %K period=36, Slowing=24, %D period=24)

Preferred Time Frame(s): 1-Minute, 5-Minute, 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day

Recommended Trading Sessions: Any

Currency Pairs: Any pair

Download

Download the BBands Stochastic Forex Trading Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following indicator or chart pattern gets put on display:

  1. If the royal blue dotted line of the Doda-BBands custom MT4 indicator gets positioned slightly below the candlesticks as seen on Fig. 1.0, it is an indication of upward price pressures i.e. a buy signal.
  2. If the red dotted line of the stochastic indicator crosses its light sea green line below the 20.00 level (oversold region) in a bottom up manner, a buy trigger is said to be in focus.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions takes center stage:

  1. If the Doda-BBands custom MT4 indicator displays a red dotted line above price bars, it is an indicator of weaning bulls power, hence an exit or take profit will suffice.
  2. If the red dotted line of the stochastic MT4 indicator intersects the light sea green line above the 80.00 level (overbought region) in a top downward fashion, an exit or take profit is recommended.

Sell Entry Rules

Enter a sell order if the following holds true:

  1. If the red dotted line of the Doda-BBands custom MT4 indicator gets placed somewhat above the candlesticks as shown on Fig. 1.1, a sell signal is said to be in the offing.
  2. If the red dotted line of the stochastic indicator crosses its light sea green line above the 80.00 level (overbought region) in a top downward fashion, a sell trigger is said to be imminent.

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the Doda-BBands custom MT4 indicator displays a royal blue dotted line below price bars during a sell alert (refer to Fig. 1.1), it is an indicator of weaning bears power, hence an exit or take profit will do.
  2. If the red dotted line of the stochastic MT4 indicator intersects the light sea green line below the 20.00 level (oversold region) in a bottom up manner, an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

Download the BBands Stochastic Forex Trading Strategy

About The Trading Indicators

The Stochastic oscillator is a momentum oscillator that is attributed to George Lane.

The indicator is made up of two lines, the %K fast line and the %D slow line, while it oscillates between 1 and 100.

Essentially, the Stochastic gauges the relationship between an assets closing price and its price range over a specified time period.

The Doda-BBands indicator is the modified version of Bollinger band and generates buy and sell signals based on this premise.

Share Now!