Once you have accurate entry signal, you can further increase its accuracy by researching the possibility of improving the entry price. You can do so by simply dividing the trade into a few smaller partial trades. Each opened at slightly better price. When done correctly, this method – commonly reffed to as partial averaging helps to tremendously improve average entry price.
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In this trading system, regardless of the number of opened trades, strategy will look for same profit (in account currency). First trades therefore remain open for longer as the exposure is low. As the exposure increases, target profit remains the same. Therefore, it can be achieved faster. As the risk increases strategy liquidates the trades faster.
Multiple volatility bollinger bands tunnels are used to signal our entry (we can only enter once per tunnel deviation). MACD trend filter is also employed to increase trade entry accuracy in trending conditions, however this type of system works just as well in ranging market conditions.
The system was tested on high quality tick data of EURUSD since 2003 (1H). It absolutely works just as well on any currency pair or time frames. The strategy is provided with free expert advisor. To use it for scalping adjust setting for 15 min or 5 min time frames and use with care.
Used tools and indicators
Bolinger bands (period 40 same for all, tunnels with various deviations 1,2,3). We sell or buy on price surpassing the tunnel boundary only to close back within the tunnel (price bounce). If the price surpasses the tunnel without bounce, we enter the same trade (possibly with increased leverage at the next tunnel, and the next. We will use three tunnels with same period but different deviation. All parameters can be defined in expert advisor input settings.
Moving average convergence divergence (MACD 500,250) MACD histogram will identify trend. Each entry must follow the trend. We will consider only histogram. Signal line will be omitted for trend identification.
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Liquidation method (target profit 10 USD, max loss -600 USD, for 0,03 micro lot position): Strategy closes trade either in overall profit or loss in account currency. When entering the loss parameter in input settings do not forget to put (-) before the max loss parameter number.
Forex strategy rules
Sell
MACD histogram trending below zero. Downtrend. Only short trades are to be entered.
Price closing above the upper BB with deviation 1. Once it closes back below it, we enter the trade short.
Price can now either move immediately to profit, we close our trade. Or it can move up into loss. If it moves to loss, the scenario is repeated.
We wait for price to close above upper BB line with deviation 2. Once it closes back below it, we enter the second trade short (increased leverage may be used).
We close both positions in profit, or we react those steps once more at last upper tunnel boundary (dev 3).
At each tunnel boundary only one trade should be opened, however, expert allows adjusting number of opened trades simultaneously for each tunnel level.
All existing trades (including long) are closed either at account profit or loss.
Buy
MACD histogram trending above zero. Uptrend. Only long trades are to be entered.
Price closing below the bottom BB with deviation 1. Once it closes back above it, we enter the trade long.
Price can now either move immediately to profit - we close our trade. Or it can move up into loss. If it moves to loss, the scenario is repeated.
We wait for price to close below bottom BB line with deviation 2. Once it closes back above it, we enter the second trade long (increased leverage may be used).
We close both positions in profit, or we repeat those steps once more at last bottom tunnel boundary (dev 3).
At each tunnel boundary only one trade should be opened, however, expert allows adjusting number of opened trades simultaneously for each tunnel level.
All existing trades (including short) are closed either at account profit or loss.
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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.
