Amazing scalping forex strategy, using bollinger bands forex indicator together with parabolic SAR for exit timing. Strategy works very well in trending market and it is able to deal with the ranging conditions too. Costs of entering position (stop loss) is extremely tight even for a scalping strategy in 5 minutes timeframe.
What is most important is the fact, that this strategy allows profits to roll by remaining in profitable position for as long as possible.
Bollinger bands are used a method of creating price tunnel reacting to volatility. Price closing beyond its boundaries is signalizing growing momentum in the direction of breakout. This will be our entry signal. SAR forex indicator its often times overlooked, but it still remains one of the best tool for stop loss placement. We will use both of these tools in this forex strategy.
Forex indicators used in strategy
Bollinger bands (default settings)
Parabolic SAR (step 0,01)
Apply both of the indicators into 5 min charts of any major currency pair. Recommended EURUSD, USDJPY.
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Forex strategy rules:
SELL: Strong bearish candle closing bellow bottom bollinger band.
After the candle close we check if SAR dot closed above the price candle. If SAR closed above, we enter the trade short. Stop loss is placed one pip above the high of our signal candle.
We do not move our stop loss with every SAR dot closed. We leave our initial stop loss in place. We move it to break even only after strategy reaches significant profit. Postion is liquidated in profit on first price candle that closes with SAR dot below it.
BUY: Strong bullish candle closing above upper bollinger band.
After the candle close we check if SAR dot closed below the price candle. If SAR closed below, we enter the trade long. Stop loss is placed one pip below the low of our signal candle.
We do not move our stop loss with every SAR dot closed. We leave our initial stop loss in place. We move it to break even only after strategy reaches significant profit. Position is liquidated in profit on first price candle that closes with SAR dot above it.
Notes to the forex strategy: Unlike the standard SAR use for stop loss placement, this forex strategy uses SAR only to mark the candle at the brink of the price wave. This action allows strategy to hunt for price movements up to a hundred pips risking only 10 – 20 pips.