Free Deviation Bands Forex Trading Strategy

Trading like the pros do might not be an easy task, but it is certainly doable for one who knows the concept behind their success.

Undoubtedly, this concept does not entail spending enormous amount of hours staring at the chart until your eyes burn, rather, it is a well-articulated trading process.

The Free Deviation Bands forex trading strategy is a simple strategy, with a view of reducing the amount of time you spend in front of your trading chart, while still keeping you profitable as well.

Chart Setup

MetaTrader4 Indicators: BBands_Stop_BO.ex4 (Inputs Variable Modified; Length=25, Nbars=100000), Standard Deviation (Default Setting), freeRSI.ex4 (Colors Modified, #1=None, #2=None)

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

Recommended Trading Sessions: Any (London, New York, Tokyo)

Currency Pairs: Any pair

Download

Download the Free Deviation Bands Forex Trading Strategy 

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy order if the following rules or conditions hold sway:

  1. If the medium sea green line of the Standard Deviation MT4 indicator shows a low reading (see Fig. 1.0), it is indicative of a possible rise in volatility and a subsequent big price move, as such we’ll wait for other indicators for confirmation of what next.
  2. If the chartreuse dotted line of the BBands_Stop_BO custom indicator gets aligned below the candlesticks as seen on Fig. 1.0, price is said to be pushed to the upside i.e. a trigger to go long on the selected currency pair.
  3. If the lime green line of the freeRSI custom indicator break below the 30.00 mark (oversold region) and breaks above this level as shown on Fig. 1.0, a bullish trend is said to be looming i.e. a signal to go long on the designated forex pair.

Stop Loss for Buy Entry: Place stop loss below support (green dotted line).

Exit Strategy/Take Profit for Buy Entry

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

  1. If the medium sea green line of the Standard Deviation indicator reveals a very high reading, it is indicative that a big price change has just happened (after having a big bullish trend), but that a decrease in volatility could soon follow, hence an exit or take profit is advised.
  2. If the BBands_Stop_BO custom indicator displays an orange dot somewhat above price bars during a buy signal, an exit or take profit is duly advised.
  3. If the lime green line of the freeRSI custom indicator break below the 70.00 level (overbought region) as illustrated on Fig. 1.0, an exit or take profit will suffice.

Sell Entry Rules

Enter a sell order if the following holds true:

  1. If the medium sea green line of the Standard Deviation MT4 indicator shows a low reading (see Fig. 1.1), it is indicative of a possible rise in volatility and a subsequent big price move, as such we’ll wait for other indicators for confirmation.
  2. If the orange dotted line of the BBands_Stop_BO custom indicator gets aligned above the candlesticks as seen on Fig. 1.1, price is said to be driven lower i.e. a trigger to go short on the designated currency pair.
  3. If the lime green line of the freeRSI custom indicator break above the 70.00 mark (overbought region) and dips below this level as seen on Fig. 1.1, a bearish trend is said to be imminent i.e. a signal to go short on the currency pair of focus.

Stop Loss for Sell Entry: Place stop loss above resistance (red dotted line).

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the medium sea green line of the Standard Deviation indicator reveals a very high reading, it is indicative that a big price change has just happened (following a big sell), but that a decrease in volatility could soon follow, hence an exit or take profit is advised.
  2. If the BBands_Stop_BO custom indicator displays a chartreuse dot slightly below price bars during a sell signal (see Fig. 1.1), an exit or take profit is duly recommended.
  3. If the lime green line of the freeRSI custom indicator break above the 30.00 level (oversold region), an exit or take profit will do.

Sell Trade Example

Fig. 1.1

Free Download

Download the Free Deviation Bands Forex Trading Strategy

About The Trading Indicators

The BBands_Stop_BO.ex4 is a trend indicator and a modified Bollinger Bands.

The indicator finds its use in the gauging trend change, along with setting stop orders.

The freeRSI.ex4 custom indicator is an advanced RSI indicator that built on the RSI indicator itself, Envelope periods and 3 Moving Averages.

The Standard Deviation MT4 indicator is designed to aid traders predict future price volatility.