Vortex Bollinger Bands Forex Trading Strategy
The Vortex Bollinger Bands forex trading strategy is a trading system that combines the Bollinger Bands, buzzer indicator and the vortex indicator.
The core of this trading system is to determine breakout conditions and rise them in the safest possible manner.
MetaTrader4 Indicators: Bollinger Bands (20, 0, 2), Vortex Indicator.ex4 (default setting), Buzzer.ex4 (20)
Preferred Time Frame(s): 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours
Recommended Trading Sessions: Any
Currency Pairs: Any pair
Buy Example (click the image for full size):
Long Entry Rules:
Initiate a Buy position when the following conditions are set:
- Watch the Vortex indicator green line cross the red line upward. Also note the squeeze that preceded the cross, which means that price was in a range and the cross which is following by a widening of the lines on the Vortex custom indicator, explains the breakout that was seen in the chart i.e. a bullish breakout due to the green Vortex line crossing the red line upward.
- The Bollinger Bands did exhibit their characteristic squeeze, which usually precedes a breakout i.e. a bullish breakout as seen on Fig. 1.0 (the bands begins to widen and price headed in the bullish direction).
- The Buzzer custom indicator supports our bullish sentiments as the line changes color to lime, with price bars aligned above the indicator line.
Stop Loss for Long Entry: Stop loss should be placed at convenient level beneath the lower Bollinger Bands considering your personal money management strategy.
Exit Strategy/Take Profit for Long Entry: Look out for the following indicator or chart pattern for a well-informed exit or possible take profit conditions.
- If the Vortex indicator begins to contract and eventually crosses, it signals the end of an existing trend and you should consider closing open position(s).
- The Bollinger Band starts to squeeze indicating that price is entering a range (watch for an eventual squeeze).
- If the Buzzer indicator line turns red at any instance then a reversal is underway. More seriously, is when the red Buzzer line is aligned above the price bars.
Sell Entry Rules:
The following rules makes the market ripe for a sell entry when considering the Vortex Forex Trading Strategy:
- The green line of the Vortex indicator crosses the red line downward, an indication that price is about to drop.
- The widening of the Bollinger Bands following a squeeze in the Bands.
- The Buzzer custom indicator turns red above price bars indicating a bears market.
Stop Loss for Sell Entry: Place stop loss at convenient level above the upper Bollinger Bands in line with your personal money management rues.
Exit Strategy/Take Profit for Sell Entry:
The following rules will enforce an exit or take profit from our open position(s):
- The Vortex indicator contracts and possibly crosses i.e. the green line crossing the red Vortex indicator line upward.
- A contraction of the Bollinger Bands indicates a cooling off of things in view of a reduction in volatility.
- The Buzzer custom indicator turns green.
About The Trading Indicators
The Bollinger Bands are made up of three bands with the outer bands being plotted as standard deviations away from the middle simple moving average band.
The Buzzer custom indicator is also built based on modifies moving averages, while the Vortex indicator is designed in the form of a simple reversal system with an entry filter that resembles the Wilder’s Directional Movement Index (DMI).