Profitable scalping forex strategy using Bollinger bands as main entry signal. Works on any currency pair thanks to using fundamental principles of price range and volatility, represented by BB indicator. Alligator forex indicator (combination of moving averages) is used to take only trend following positions. Trading in the direction of the trend improves success rate of this forex strategy drastically.
Strategy uses equal stop and take profit levels. It does not try to game the market by artificially widening profit targets. Therefore, it is viable even in the most unsuitable market conditions and ready to explode with profits during a trend.
Strategy is easy to master as it requires only a few simple rules to be mastered.
Indicators used in the forex strategy
Bollinger bands (default period of 20). Purpose: Identify price tunnel, with volatility included in the calculation. More accurate method than manual tunnel drawing. It is able to better adapt to shattered wave structure of the price in current markets.
Alligator forex indicator (130,80,50). Purpose: Correct trend identification alone can improve success rate of any forex trading strategy drastically. Alligator is a simple and robust combination of basic moving averages that works very well in this scalping strategy.
Plot both of the indicators in 5 min chart of any major currency pair.
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Forex strategy rules:
SELL:
First, identify downtrend by observing alligator indicator. In downtrend, alligator lines are clearly separated and lined from top to bottom according to the calculation period : blue, red,green.
Once we correctly identify the trend by using alligator. We move to the signal on Bollinger bands.
Signal: Bearish candle closing below bottom Bollinger bands. We enter immediately on signal candle close (new candle open). Stop loss is placed one pip above high of the signal candle.
Take profit: Take profit equals stop loss.
BUY:
First, identify uptrend by observing alligator indicator. In uptrend, alligator lines are clearly separated and lined from top to bottom according to the calculation period : green, red, blue.
Once we correctly identify the trend by using alligator. We move to the signal on Bollinger bands.
Signal: Bullish candle closing above upper Bollinger bands. We enter immediately on signal candle close (new candle open). Stop loss is placed one pip below the low of the signal candle.
Take profit: Take profit equals stop loss.
Notes: It is also possible to widen the take profit in extremely strong trend. This is not necessary for strategy to be profitable and the decision to widen the profit target will lower the succes rate of strategy.
