Strategy based on Bollinger bands

Strategy based on Bollinger bands

Recommended timeframes H4

This strategy is based on 2 standard indicators, which makes it incredibly easy to master. The principles used are fundamental to trend trading. The strategy may be applied to any trading tools on any time-frames. The best results may be reached with such currency pairs as EUR/USD, GBP/USD, AUD/USD, CAD/USD, NZD/USD, USD/JPY on H1 and H4 time-frames.

Indicators used:

• Bollinger Bands (Period 20, Shift 0, Deviation 3) - the green lines on the chart

• EMA (Period 50, Shift 0) - the orange line on the chart.

Conditions for opening "Buy" trades (pic.1):

Pic. 1

• The price chart is located above the orange line.

• The price touches (or almost touches) the middle green line.

• Open a long trade once the candle has broken out the HIGH value of the previous candle.  

Conditions for opening "Sell" trades:

Pic. 2

• The price chart is located below the orange line.

• The price touches (or almost touches) the middle green line.

• Open a short trade once the candle has broken out the LOW value of the previous candle.    

Conditions for closing trades

• Stop Loss at the distance of 5 points from the middle green line.

• Trailing stop

• Targets will vary according to the instrument and time-frame. For example: 60 points for EUR/USD H4, 70 points for GBP/USD H4, 200 points for EUR/USD D1, 250 points for GBP/USD D1.

• The price has reached the lower or upper line of Bollinger bands.