Bollinger Bands With MACD Forex Strategy

Technical indicators and charts are tools what the vast majority of currency traders use to develop buy/sell forex trading strategies.

Having a bit background knowledge and understanding of how a system works can yield a profitable trading strategy.

The Bollinger Bands With MACD Forex strategy works well on various charts, ranging from the 1-minute charts up to 1-week.

Using this strategy enables currency traders to profit from both consolidating and trending markets.

Chart Setup

MetaTrader4 Indicators: bb-macd.ex4 (Default Setting), kaufman-adaptive-moving-average.ex4 (Inputs Variable Modified; periodAMA=18)

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

Recommended Trading Sessions: Any

Currency Pairs: Any pair

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Download the Bollinger Bands With MACD Forex Strategy

Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a bullish trade if the following indicator or chart pattern gets put on display:

  1. If the lime dotted line of the bb-macd Metatrader 4 forex indicator pops up within the indicator window as illustrated on Fig. 1.0, price is said to be pushed higher i.e. a trigger to go long on the selected forex pair.
  2. If the blue dotted gray line of the kaufman-adaptive-moving-average indicator stay somewhat below the price bars as indicated on Fig. 1.0, the overall market sentiment is said to be bullish, therefore a buy alert will suffice.

Stop Loss for Buy Entry: Place stop loss 2-5 pips below immediate support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit from all trades if the following rules or conditions takes precedence:

  1. If the bb-macd indicator pops up a magenta dot within its window during a bullish trend, it is indicative of an imminent bearish reversal, thus an exit or take profit is advised.
  2. If the kaufman-adaptive-moving-average indicator pulls up a red dot on its gray line (see Fig. 1.0), more bulls are said to be closing their orders, hence an exit or take profit is recommended.

Sell Entry Rules

Go short if the following setups gets displayed rightly on the activity chart:

  1. If the magenta dotted line of the bb-macd custom indicator pops up within the indicator window as shown on Fig. 1.1, price is said to be pressured lower i.e. a trigger to go short on the designated fx pair.
  2. If the red dotted gray line of the kaufman-adaptive-moving-average indicator stay fairly above the candlesticks as seen on Fig. 1.1, the general market sentiment is said to be bearish, therefore a sell alert will do.

Stop Loss for Sell Entry: Place stop loss 2-5 pips above immediate resistance.

Exit Strategy/Take Profit for Sell Entry

Exit or take profit if the following takes center stage:

  1. If the bb-macd indicator displays a lime dot within its window during a bearish trend, it is pointing to diminishing bears power, thus an exit or take profit stance is appropriate.
  2. If the kaufman-adaptive-moving-average indicator pulls up a blue dot on its gray line (refer to Fig. 1.1), more bears are said to be closing their positions, hence an exit or take profit is advised.

Sell Trade Example

Fig. 1.1

Free Download

Download the Bollinger Bands With MACD Forex Strategy

About The Trading Indicators

The bb-macd.ex4 custom indicator is a fine blend of the Bollinger Bands and MACD indicator.

It offers a good picture of price volatility and trends.

The kaufman-adaptive-moving-average.ex4 is a variant of the adaptive moving average and provides buy/sell trading signals for any currency pair.

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