Volumes are often underutilized in forex trading. Accuracy of tick volume can be questioned, but it doesn't change the fact that tick activity on candle can become a good trading signal. This forex strategy works with the idea of valid breakout. A valid breakout is often coupled with activity (volumes) growth, as the price approaches tunnel boundaries.
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Breakout is confirmed both by the tunnel boundaries and price being traded with growing intensity before and during breakout.
This forex strategy measures the activity on last five candles. Scalping order takes place after price breaks bollinger bands tunnel. Free, expert is provided. Strategy was tested on both 30 min and 1H chart (last 3 years data) showing many different profitable setups (manipulating BB period, deviation, TP, SL).
Used tools and indicators
Bollinger bands forex indicator (period 40, deviation 2, in 30 min eurusd chart) : BB created tunnel will be used to find breakout. Candle closing outside of BB tunnel boundaries will be our primary signal. Adjust Bollinger bands period and deviation to apply the strategy in different time frames
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Volumes on last 5 bars: Breakout signal is confirmed by volumes growing on each of last 5 candles. Each consecutive candle has higher volume than the previous one. Breakout candle confirming the signal has the largest candle. It doesn't have to be the first candle closing outside the tunnel, but it has to close outside of it.
Applied in 1H EURUSD chart.
Forex strategy rules
Sell
Price closing above upper bollinger band.
Growing volume on last 5 candles (volume on each candle must be higher, or equal than on previous candle).
We enter the trade short on fifth candle close:
Take profit: 70 pips
Stop loss: 20 pips
Buy
Price closing below bottom bollinger band.
Growing volume on last 5 candles (volume on each candle must be higher, or equal than on previous candle).
We enter the trade long on fifth candle close:
Take profit: 70
Stop loss: 20
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Disclaimer: Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.
