Bollinger Bands Forex Strategy For Metatrader 5

The Bollinger Bands Forex strategy for Metatrader 5 is quite robust and offers good profits when used according to the buy and sell rules.

Trading rules for entering and exiting a position are clear and direct, which makes this Bollinger Bands strategy easy to implement.

Scalper, day traders and swing traders can benefit from this strategy.

Trade Setup 

MetaTrader 5 Indicators: Bollinger bands squeeze.ex5 (Default Setting), Moving Average of Oscillator.ex5 (Parameters Modified; Fast EMA=14, Slow EMA=28, MACD SMA=11), Relative Strength Index (Parameters Modified; Period=24)

Trade Style: Scalping, day trading, swing trading

Trading Sessions: London | New York | Tokyo

Currency Pairs: Majors, cross pairs, exotics

Platform: Metatrader 5 (MT5)

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Buy Trade Example: EURCHF, M30 Chart

Fig. 1.0

Trading Strategy Rules For Buy and Sell Trades Explained

Buy Entry

Enter a buy trade if the following trading conditions are met:

  1. If the middle line of the Bollinger bands squeeze custom indicator changes to lime green as shown on Fig. 1.0, price is said to be driven to the upside i.e. a trigger to go long on the designated currency pair.
  2. If the silver histograms of the Moving Average of Oscillator Metatrader 5 indicator get displayed above the 0.00 center line (see Fig. 1.0), the general market sentiment is said to be bullish, therefore a buy will suffice.
  3. If the dodger blue line of the Relative Strength Index breaksand hoversabove the 50.00 level, it is pointing to an increased bullish sentiment, therefore a buy will do.

Suggested Stop Loss for Buy Entry: Place stop loss below the most recent swing low.

Suggested Exit Strategy/Take Profit for Buy Trade

Exit the buy trade if the following trading conditions are met:

  1. If while a bullish trend is running, the middle line of the Bollinger bands squeeze indicator reverts to orange, it is signaling the likely end to the current trend, as such an exit or take profit is recommended.
  2. If the silver histograms of the Moving Average of Oscillator indicator readjust to stay below the 0.00 horizontal line (refer to Fig. 1.0), it is a trigger to exit or take profit at once.
  3. If the dodger blue line of the Relative Strength Index indicator breaksbelow the 50.00 signal level while a bullish trend is running, traders are advised to exit or take profit immediately.

Sell Entry

Open a sell trade if the following trading conditions are met:

  1. If the middle line of the Bollinger bands squeeze forex indicator changes to orange as illustrated on Fig. 1.1, price is said to be pressured lower i.e. a trigger to sell the currency pair of interest.
  2. If the silver histograms of the Moving Average of Oscillator indicator get displayed below the 0.00 center line as seen on Fig. 1.1, the overall market sentiment is said to be bearish, thus pointing us to a likely sell signal.
  3. If the dodger blue line of the Relative Strength Index breaksand hoversbelow the 50.00 level, it is pointing to an increased bearish sentiment, therefore a sell will suffice.

Suggested Stop Loss for Sell Entry: Place stop loss above the most recent swing high.

Suggested Exit Strategy/Take Profit for Sell Entry

Exit the sell trade if the following trading conditions are met:

  1. If during a bearish trend, the middle line of the Bollinger bands squeeze indicator reverts to lime green, it is pointing to a probable bullish reversal i.e. a signal to exit or take profit forthwith.
  2. If the silver histograms of the Moving Average of Oscillator indicator realign to stay above the 0.00 horizontal line as exemplified on Fig. 1.1, it is a trigger to exit or take profit immediately.
  3. If the dodger blue line of the Relative Strength Index surgesabove the 50.00 signal level during a bearish trend, it denotes a likely end to the current trend, hence an exit or take profit stance is advised.

Sell Trade Example: EURCHF, M30 Chart

Fig. 1.1

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MT5 Trading Indicators Used For This Strategy

The Relative Strength Index is a momentum indicator that gauges the magnitude of recent price changes to determine overbought or oversold conditions in the price of a forex pair.

The Moving Average of Oscillator or OsMA is a tool that tries to spot overbought or oversold conditions by gauging how far an oscillator lies from its moving average.

The Bollinger bands squeeze Metatrader 5 forex indicator is used to determine the periods of “no entry” and probable trends by combining the Keltner and Bollinger bands.

The squeeze occur when the Bollinger bands are within the Keltner channel.

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