Primarily scalping trading system. It is taking advantage of rare and quite extreme conditions when small correction occurs on rapidly moving price. Before entering the trade strategy makes sure that we have long term trend and current momentum on our side. Then we look for minor, one candle correction.
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This simple correction often provides the best possible entry within the rapidly moving price, that could be considered by many to be a valid breakout. To identify rapidly moving price, volatility dependent tunnel based on Bollinger band is drawn. For best results, strategy avoids scalping in chaotic low timeframes and instead it focuses on scalping (or day trading) in 1 to 4H chart.
This scalping strategy was tested for profitability on high quality tick data in 1H EURUSD chart. Following settings have been used to achieve results published in screenshots.
Used tools and indicators
Exponential moving average (EMA 500). It relative position to BB will determine current main trend. All trades must be taken only in its direction. This step ensures that we do not trade against the market flow.
Bollinger bands (BB period 60, deviation 2). Tunnel below or above EMA will signalize trend. If tunnel touches the EMA this may signalize reversal or ranging market and no trade can be entered. Price escaping the tunnel in the direction of trend will be our trading signal. For price to escape the adaptable BB tunnel, it must move rapidly. This can be considered a breakout in some trading systems. Nonce we observe this situation, we will be looking for signal candle full formed outside of tunnel.
Signal candle (min 10pips, max 150 pips). Signal. Single candle full formed outside of tunnel boundaries, closing against the direction of trend. We can define size of a candle body for best results.
Forex strategy rules
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SELL
The bb Tunnel is fully formed below EMA. Downtrend is present in the market.
Price starts to move below the bottom BB. This signalize possible breakout or at least price with rapid momentum in the direction of trend.
To give ourselves a better chances for success and a better price, we will be looking for bullish candle with body range of. We enter the trade on its close.
Stop loss: 100 pips
Take profit: 20 pips
BUY
The bb Tunnel is fully formed above EMA. Uptrend is present in the market.
Price starts to move above the upper BB. This signalize possible breakout or at least price with rapid momentum in the direction of trend.
We will be looking for bearish candle with body range of. We enter the trade on its close.
Stop loss: 100 pips
Take profit: 20 pips
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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.
