Strategy was designed for scalping in 15min charts. However, It can be also used with great results across all timeframes. This is proved by our historical data test since 2003 in 1H chart of EURUSD. Results were achieved by strategy simply doing a good job in trend identification and finding a good price for entry.
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The good price is understood as price at the break (min,max) of a price wave. In other words, strategy goes for tops and bottoms. It does so methodically.
One of the ways to identify those tops and bottoms is to use a tunnel. Strategy manages to use BB to identify those price points with high accuracy.
The system was tested on high quality historical data on 1H EURUSD (15 min chart doesn't provide as high of an accuracy and test is more time consuming). Following setting have been used.
Forex strategy tools and indicators
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MACD Moving average convergence divergence (500,250 and 250,100). We will use two independent MACD histograms. The goal is to identify major trend and confirm it by more recent trend development. This helps to avoid market reversals. We will be looking for entry with confluence with both MACD trends. To use it as a scalping forex strategy requires adjusting the periods of both MACD filters upwards.
Bollinger bands (BB period 40, deviation 2). We will be looking for price closing outside of BB tunnel only to close back within with next candle. We enter the trade once the price closes in the tunnel looking for a bounce in the direction of trend.
Break even function (40 pips). After strategy reaches predefined profit, stop loss is placed at the price of entry point.
Forex strategy rules
Both MACD histograms trending below zero. Downtrend confirmed. We will be looking only for short trades.
Signal: Price closing above upper BB line. We will enter trade short on first candle closing back within the tunnel (bellow upper BB).
Default point for stop loss placement is close of the last candle above the upper BB. Additional distance of 60 pips is applied to the SL.
Take profit: Price touching bottom BB.
Both MACD histograms trending above zero. Uptrend confirmed. We will be looking only for long trades.
Signal: Price closing below bottom BB line. We will enter trade long on first candle closing back within the tunnel (above bottom BB).
Default point for stop loss placement is close of the last candle below the bottom BB. Additional distance of 60 pips is applied to the SL.
Take profit: Price touching upper BB
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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.