Bollinger Bands Forex Scalping Strategy
The Bollinger Bands forex scalping strategy is designed to offer traders numerous opportunities to rake in profits during the daily trading sessions.
MetaTrader4 Indicators: ScalpCycle.ex4 (default setting), SEFC084.ex4 (default setting), Bollinger Bands (20)
Preferred Time Frame(s): 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: Any
Currency Pairs: (USD/CHF, EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, NZD/USD, EUR/CHF)
Buy Example (click the image for full size):
Long Entry Rules:
The following indicator or chart patterns will confirm a buy entry:
- When the ash colored arrows of the ScalpCycle custom indicators point upward, it indicates that price is on its way up.
- The DeepSkyBlue color of the SEFC084 custom indicator aligned above the 0.00 mark denote a buy signal.
- The Bollinger Bands are seen to widen with price breaking out to the up side, after sessions of contraction.
Stop Loss for Long Entry: Place stop loss at convenient level below the lower outer band of the Bollinger bands.
Exit Strategy/Take Profit for Long Entry
The following rules should inform our exit or take profit strategy:
- When the red colored arrows of the ScalpCycle custom indicator point downward, it indicates that price is being pressured in favor of the bears. Also note that if the histograms of the ScalpCycle indicator pushes into the 90 – 100 level, then it is in the overbought region. Exit signals from this zone are even more valid.
- Any violet bar of the SEFC084 custom indicator that forms below the 0.00 area indicates a reversal.
- Contraction in the Bollinger Bands indicates that the trend is losing momentum and a reversal is possibly underway.
Sell Entry Rules
Initiate a sell entry when the following conditions are in place:
- Lookout for the red arrows of the ScalpCycle custom indicator pointing downward, starting off from the 90 – 100 level – this signals a bearish trend.
- The violet bars of the SEFC084 custom indicator that forms below the 0.00 area indicates bearish signal.
- Look out for widening of the outer bands of the Bollinger Bands following sessions of contraction on the activity chart.
Stop Loss for Sell Entry: Place stop loss at convenient level above the uper outer band of the Bollinger bands.
Exit Strategy/Take Profit for Sell Entry
The following rule will define an exit or take profit strategy:
- When the SEFC084 custom indicator slips lower into the 0 – 10 region and forms an ash colored arrow that points upward, it signals a trend reversal.
- The first DeepSkyBlue colored SEFC084 custom indicator bar that shows up denote a reversal to the upside and an exit should be considered.
- Watch out for contraction in the Bollinger Bands, as it alerts us to momentum reduction in the instrument being followed and an exit would do at this point.
About The Trading Indicators
The ScalpCycle.ex4 forex indicator is built around the stochastic oscillator and the exponential moving average, while the SEFC084.ex4 custom indicator is based on the SEFC indicators.
The Bollinger Bands is a volatility indicator that has two of its bands plotted as standard deviations away from a the middle line i.e. the simple moving average.