Swing Trade Forex Bollinger Band Strategy

August 23, 2016

931

Swing Trade Forex Bollinger Band Strategy

This is a king of strategy that uses a 4 hour or daily timeframe and suited to all currency pairs.

Forex Indicators:

200 period simple moving average (SMA).
50 period SMA.
50 period SMA (Based on close),
100 period Bollinger Bands (100, 2))
200 period bollinger bands (200, 2)
Stochastic Indicator ( period 14, 7,3) ,
CPI (set only candlestick reversal patterns),
Spike pattern (candlestick pattern).

Rules:

The price must be at or near either the 50 SMA, 100 SMA, 200 SMA, 100BB or 200BB. If price are not found in this area, then do not trade.
These indicators aserve as zones/levels or probability, it means that the chance of a reaction has increased.

Important:

In the case of the BB’s only, the price can sometimes travel a fair distance through the BB. A trade will still be considered even if price have gone far.
When stochastic 14/7/3 is overbought (both lines are above 80) or oversold (both lines are below 20)then there is still a trade that can happen.
The stochastic lines must be “turning and touching”.
Candle bar must be clear on its reversal which occurs at one of the zones of probability and when the stochastic is “touching and turning.”
There are also candle patterns that must be considered and these are the some important patterns: spikes, dojis, engulfing candles, piercing patterns.

Buy Entry:

Stochastic Indicator is in Oversold and crosses downward ;
The price where the price is touching or very close to the above 50,100 or 200 SMA OR the 100 or 200 BB.
Wait the formation reversal pattern.

Sell Entry:

Stochastic Indicator is in Overbought and crosses upward ;
The price where the price is touching or very close to the below 50,100 or 200 SMA OR the 100 or 200 BB.
Wait the formation reversal pattern.

Exit position

Four hour chart: profit target 80-100 pips depends by currency pair and Initial stop loss 50-70 pips. After 60 pips in gain move stop loss at the entry price and insert a trailing stop of 30 pips.

Daily chart: profit target 250-300 pips. Initial stop loss 80-130 pips after 150 pips in gain move stop loss at the entry price and insert an trailing stop of 50 pips.