The 5-Minute Forex Day Trading Strategy for GBP/USD is a simple, yet profitable strategy that was designed to trade the British Pound against the U.S. Dollar.
The strategy takes advantage of small price moves during the London and New York trading sessions with the help of Bollinger Bands .
It’s a great strategy for day trading and scalping purposes.
Let’s take a look at how it works:
MetaTrader4 Indicators: Bollinger Bands.ex4 (Inputs Parameter Modifie; Period=24), RSIFilter.ex4 (Defualt Setting), AMA.ex4 (Inputs Parameter Modified; periodAMA=18)
Preferred Time Frame(s): 5-Minute (optional: 1-Minute, 15-Minute)
Recommended Trading Sessions: London, New York
Currency Pairs: GBP/USD
Buy Trade Example
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets put on display:
- If the middle band of the Bollinger Bands indicator crosses the mostly deep sky blue dotted sienna line of the AMA custom MT4 forex indicator to stay below the middle band as shown on Fig. 1.0, the overall market sentiment is said to be bullish, hence a trigger to go long on the GBP/USD forex pair.
- If the orange colored bars of the RSIFilter Metatrader 4 forex indicator gets aligned above the zero signal level (see Fig. 1.0), price is said to be driven higher, i.e. a trigger to go long on the designated currency pair.
Stop Loss for Buy Entry: Place stop loss below immediate support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions takes precedence:
- If the middle band of the Bollinger Bands indicator crosses the dotted sienna line of the AMA forex indicator during the course of a bullish trend, a bearish reversal is imminent, hence an exit or take profit will suffice.
- If the vertical bars of the RSIFilter custom indicator realigns itself to form a sky blue bar below the zero signal level, it is indicative of an exit or take profit trigger.
Sell Entry Rules
Enter a sell order if the following holds true:
- If the middle band of the Bollinger Bands indicator crosses the mostly gold dotted sienna line of the AMA custom MT4 forex indicator to stay above the middle band as depicted on Fig. 1.1, the general market sentiment is said to be bearish, hence a trigger to go short on the designated fx pair.
- If the sky blue bars of the RSIFilter Metatrader 4 forex indicator gets aligned below the zero signal level as illustrated on Fig. 1.1, price is said to be pushed lower, i.e. a trigger to go short on the selected forex pair.
Stop Loss for Sell Entry: Place stop loss above immediate resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If while a bearish trend is ongoing, the middle band of the Bollinger Bands indicator crosses the dotted sienna line of the AMA indicator (refer to Fig. 1.1), an exit or take profit is said to be looming.
- If the vertical bars of the RSIFilter MT4 custom forex indicator readjust to form an orange bar that is placed above the zero signal line, price is said to making a U-turn, hence it is worthwhile to exit or take profit at once.
Sell Trade Example
About The Trading Indicators
The RSIFilter is an oscillator that is designed on the RSI indicator, offering investors clues as to when the market is overbought or oversold, along with promising trend directions.
The Adaptive Moving Average or AMA custom indicator was created by Perry Kaufman with indicative points placed in line with the standard mean-square deviation.
It is a trend-following moving average type and traders can use the changing of the color of its dotted line to specify possible trends.
The Bollinger Bands indicator was created by John Bollinger, as a tool to gauge volatility in the market, along with other vital information like sessions of market consolidation, direction of trend, possible tops and bottoms along with price targets.
Bollinger Bands are actually plotted two standard deviations away from a simple moving average.