Intraday Bollinger Bands Forex Strategy
The intraday Bollinger Bands forex trading strategy is a responsive strategy that combines the brilliance of the popular Bollinger Bands indicator and two custom built MT4 indicators. The strategy tries to catch up on trends and then profits on them.
MetaTrader4 Indicators: Bollinger Bands.ex4 (default setting), 100pips Momentum.ex4 (default setting), #!DivStochv5.ex4 (default setting)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: London Open | New York Open
Currency Pairs: Majors + cross pairs
Buy Trade Example (Click the image for full size view)
Long Entry Rules
The following chart patterns are indicative of a buy signal:
- Start off by checking on the #!DivStochv5 custom indicator pattern, if the indicator forms DarkGreen histograms above the 50.00 level, traced along by a yellow line, it so means that our overall trend is bullish and we can then move on to verify with the other indicator patterns.
- If the candlesticks bounces off the lower Bollinger Bands, surges higher and breaks-out following the widening of the Bands, it indicates a bullish signal.
- Price bar must also open and close above the 100pips Momentum custom indicator, following the blue line crossing the red line upward.
Stop Loss for Long Entry: Place stop loss below the most recent support level.
Exit Strategy/Take Profit for Long Entry
The following conditions or rules will trigger an exit or take profit:
- If the Red histograms of the #!DivStochv5 custom indicator laced with a blue line forms within the indicator window, it signals an overall trend change, thus an exit or take profit trigger.
- If the Bollinger Bands contracts, it is a signal the volatility is thinning out, signaling an exit or take profit.
- If price bar closes below the 100pips Momentum custom indicator, it is a signal that price making a U-turn from an earlier direction.
Sell Entry Rules
Enter a sell order when the following conditions are in full glare on the activity chart:
- Check to see if the #!DivStochv5 custom indicator pattern, if the indicator forms red histograms above the 50.00 level, traced along by a blue line, it so means that the overall trend is bearish, sequel to which we can check on other conditions for entry.
- If the candlesticks bounces off the upper Bollinger Bands, then surges lower and breaks-out following the widening of the Bands, it is a trigger for a sell.
- If price bar opens and closes below the 100pips Momentum custom indicator, coupled with its blue line crossing the red line downward.
Stop Loss for Sell Entry: Place stop loss above the most recent resistance level.
Exit Strategy/Take Profit for Sell Entry
Ensure that the following conditions or rules are in place before initiating an exit or take profit:
- If the DarkGreen histograms of the #!DivStochv5 custom indicator laced with the yellow line is formed within its indicator window, we should anticipate reversal and as such an exit or take profit will do.
- If the outer bands of the Bollinger Bands begins to contract, an exit or take profit should be triggered.
- If price bar closes above the 100pips Momentum custom indicator, an exit or take profit trigger should go off.
About The Trading Indicators
The #!DivStochv5 custom indicator is a momentum indicator that links an fx pair’s closing price to its price range over a specified time frame. #!DivStochv5 trails momentum or speed of price.
Created by John Bollinger, the Bollinger Bands shares a lot of similarities to the moving average Envelopes indicator. However, the Bollinger Bands outer bands changes in relation to volatility.
The 100pips Momentum indicator offers bullish and bearish entry signals. This is mainly as a result of the composition of the indicator i.e. it is made up of 4 technical studies with the ATR volatility indicator included.