This forex strategy utilizes MACD for trend identification and Bollinger bands as a method of establishing the range. Once the range breakout occurs in the direction of main trend, we enter the position. We are looking for a trade with profit about 2 – 10 times bigger than average loss (RRR 1:2 – 1:10).
Used forex indicators
Bollinger bands forex indicator - default settings
Apply both indicators in 1 h chart of EURUSD or any major currency pair.
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Forex strategy rules:
MACD histogram closing below zero line (central line). Signalizing downtrend.
First trigger: Price touches upper Bollinger band.
Second trigger: Price penetrates bottom BB. We enter the trade short on first candle closing below bottom BB.
Stop loss: Placed 1 pip above highest price reached in first trigger.
Take profit: MACD histogram closes above zero line.
MACD histogram closing above zero line (central line). Signalizing uptrend.
First trigger: Price touches bottom Bollinger band.
Second trigger: Price penetrates upper BB. We enter the trade long on first candle closing above upper BB.
Stop loss: Placed 1 pip below lowest price reached in first trigger.
Take profit: MACD histogram closes below zero line.
Notes: We always take first signal after MACD reversal. If it fails, strategy allows entering once more at next signal (to the same direction). This forex strategy takes only a few trades, therefore it can be used on more than one currency pair simultaneously.