Substantial momentum is necessary for a price to break outside of bollinger bands channel. Once the price moves outside of channel boundaries, it usually moves very fast and movement doesn't last very long. This creates a perfect conditions for aggressive scalping. For trader to achieve the best real time entry simple candle formation signal is used. Candle formation will provide us with real time signal confirming the price movement as it is based on price overcoming the correction that tends to be very narrow.
Strategy is traded in 5 min data window. Good ECN broker is therefore required to provide you with high quality data feed and reliable execution.
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Used forex indicators:
Bollinger bands (60 with deviation 0,1). Price escaping bollinger bands channel must be moving rapidly to do so. This often marks the beginning or new trend.
Candle signal. One candle in the direction of price escape overcoming two flat correction candles.
Forex strategy rules:
SELL:
Price closing below bottom BB line.
Signal formation: Two flat bullish candles followed by one tall bearish candle, closing below the low of first bullish candle. We enter short on bearish candle close.
Stop loss: Place it one pip above the signal formation high.
Take profit: Move stop loss to break even after profit that equals formation size is reached. Full take profit – price closing inside the BB tunnel.
BUY:
Price closing above upper BB line.
Signal formation: 3 candle formation. Two flat bearish candles followed by one tall bullish candle, closing above the high of first bearish candle. We enter long on bullish candle close.
Stop loss: Place it one pip below the signal formation low.
Take profit: Move stop loss to break even after profit that equals formation size is reached. Full take profit – price closing inside the BB tunnel.
