Scalping system #14 (EURUSD scalping with Bollinger Bands)

Submitted by Hessel

Currency: EUR/USD
Time Frame: 5M, 1M

Before I explain my simple scalping system, I have to thank Chelo who posted ''Scalping system #7''. I love the simplicity of the system, and it seems to work pretty well! However, I was not fully satisfied about the entry-rules and the stop loss. Prices can move up and up and up between BB 50-2 and BB 50-3.
So I thought about tuning the system up a little bit, making the entries more reliable.

To do this, I added RSI 8 (lines on 30 & 70) and Full Stochastics 14,3,3 (lines on 20 & 80)

We now use the following indicators:

Bollinger Bands period 50 deviation 2 (yellow)
Bollinger Bands period 50 deviation 3 (blue)
Bollinger Bands period 50 deviation 4 (red)
RSI 8 (horizontal lines on 30 & 70)
Full Stochastics 14,3,3 (horizontal lines on 20 & 80)

The entry rule stays the same, when price crosses at least half way to the upper blue bollinger band, we sell. Price will retrace to the middle red line (MA50). This is where we take profit! Taking profit a little bit earlier could be wise, because it is not 100% guaranteed that the retracement will move all the way to the MA50. But, ONLY sell when RSI is above 70 and the Full Stochastics (almost) hit the 80 line.
Opposite story for a long entry!

I don't use stop losses with this system, because (especially on 5M time frame) entries are nearly almost a success. When prices go the wrong way, I just double my bet! I take profit when price nearly reaches the MA50 during a retracement. Having patient is very important when using this scalping system!

All credits to Chelo! Happy trading!

How To Use Average Directional Index (ADX) In Forex

Forex Technical Indicators | Written by Peter Bosmans |

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The Average Directional Index (ADX), invented by J. Welles Wilder is referred to as an oscillator technical analysis indicator. ADX fluctuates between 0 and 100. Readings below 20 show a weak trend while above 40, show a strong trend.

Indicator readings above 85 are rare and show a very strong up or down trend in the market. Please note: ADX does not give you an indication about the trend (up or down), it gauges the strength of the currency trend.

USD/CHF Average Directional Index (ADX) Daily Chart

Type of technical indicator: Oscillator

Forex signals from ADX

There are no signals from the ADX indicator. Use in combination with other forex technical indicators and tools to trade strong readings above 40

How To Use Average True Range (ATR) In Forex

Forex Technical Indicators | Written by Peter Bosmans |

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The Average True Range (ATR), developed by J. Welles Wilder is referred to as an technical analysis indicator that measures volatility in currency pairs and commodities. It is important to understand that ATR does not provide any forex signals, it only gives you an indication about volatility.

In general, ATR volatility in any currency pair is calculated on daily data for 14 successive periods by default. Volatility = daily high price - daily low price.

GBP/USD Average True Range (ATR 14) Daily Chart

Type of technical indicator: Volatility

Forex signals from ATR

There are no signals from the ATR indicator.

Three ideas on how to use Average True Range in forex trading

1) Setting stop losses based on ATR

You could place stop losses based on volatility. For example you enter a long/short trade and use a 30% ATR stop. The current ATR value is 149 pips in the chart above, thus stop loss would be 149 pips x 30% = 44.7 pips.

2) Setting trade objectives based on ATR

You could also place a profit target based on volatility. For example you enter a long/short trade and use a 50% ATR profit target. The current ATR value is 149 pips in the chart above, thus trade objective would be 149 pips x 50% = 75 pips.

3) Trailing stops based on ATR

For example one could use a 30% ATR trailing stop. In the chart above, the trailing stop would be trailed 44.7 pips behind the currency price.

Pin Bar Forex Scalpers Strategy

Written by Frande Mettins |

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Pin bars occurring at strong support and resistance levels generally produce reliable reversal trading signals for currency traders. Here's my step by step version of how i use them to trade market reversals. The pin bar forex scalpers strategy can be applied on higher timeframe's as well.

Forex Chart Setup:

• Preferred currency pairs: All
• Trading Indicators: Support/Resistance (Indicator inputs: set precision to 1)
• Preferred Sessions: Euro and Us Session
• Timeframe: 5 Min

Pin bars Defined

The picture below shows a bearish and a bullish pin bar. A bearish pin bar is composed of a long upper wick, small body and small lower wick. Sellers control the market price at the bar's close. In this case, we are looking to sell the currency pair in the vicinity of a significant resistance level with a stop loss set above the high price of the pin bar.

A bullish pin bar is composed of a long lower wick, small body and small upper wick. Buyers now control the market price at the bar's close. In this case, we are looking to buy the currency pair in the vicinity of a significant support level with a stop loss set below the low price of the pin bar.

Pin bar Forex Scalper Euro/Dollar Example

Forex pin bar strategy explained :

SELL TRADE (see example above)

• Wait for the currency price to trade at or near important resistance levels.
• Open short trade if a bearish pin bar appears on the chart.
• Put a stop loss 1 pip beyond the high of the pin bar.
• Take profit target T1= 25 pips / Take profit target T2= 40 pips.
TIP: You could close half of your trading position at T1 and keep the remaining half to target T2.

BUY TRADE

• Wait for the currency price to trade at or near important support levels.
• Open long trade if a bullish pin bar appears on the chart.
• Put a stop loss 1 pip beyond the low of the pin bar.
• Take profit target T1= 25 pips / Take profit target T2= 40 pips.
TIP: You could close half of your trading position at T1 and keep the remaining half to target T2.

How To Use Bollinger Bands (BB) In Forex

Forex Technical Indicators | Written by Peter Bosmans |

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Bollinger Bands (BB), developed by John Bollinger is referred to as an trend following indicator. The main purpose of Bollinger Bands is to determine of whether the currency market is trending, ranging or about to breakout of the trading range. The bands themselves act as support and resistance levels.

Bollinger Bands are composed of three bands, the middle, the lower and the upper band.

Middle band: 20 period simple moving average (default)
Upper band: Middle BB + 2 x 20 period standard deviations
Lower band: Middle BB - 2 x 20 period standard deviations

USD/JPY Bollinger Bands (BB) Hourly Chart

Type of technical indicator: Trend Following

Why are Bollinger Bands useful in forex trading?

A. 75% of the year currency pairs move between the upper and lower bands.
B. BB are useful to determine whether we are in a range or in a trend.
C. They give you some powerful insights into market volatility >> Wide bands indicate high volatilty. Narrow bands indicate low volatility.
D. If the bands are really tight, expect a currency pair to breakout sooner or later since low volume creates small range and large trading volumes could push the pair heavily in one direction.

Forex signals from Bollinger Bands

Trending Markets : Bands are sloping up or down.

In down trending markets (bands are sloping down), look for shorts in the vicinity of upper Bollinger Band. Avoid long trades.

In up trending markets (bands are sloping up), look for longs in the vicinity of the lower Bollinger Band. Avoid short trades.

Range Bound Markets: Bands are aligned horizontally.

Look to go short at the upper BB.
Look to go long at the lower BB