2023-04-14 • Updated
We all know how you love scalping, right? This trading approach helps you to take advantage out of trading on small (less than 1 hour) timeframes. In this article, we will introduce you to another scalping strategy that requires the usage of the Bollinger Bands indicator.
Timeframe: M5
Currency pairs: GBP/USD, EUR/USD
Indicators: Bollinger Bands with the following settings: a period of 20, 2 standard deviations; Stochastic Oscillator with standard settings (14, 5, 3) as a filter.
The whole strategy is based on finding a flat Bollinger band. That means, we are looking for a flat market situation, where the price does not make new highs or lows. It is recommended to trade this strategy during the early morning hours or at night when Europe is still asleep and volatility is low. The trading algorithm is very simple. You just need to follow the steps explained below.
Let’s consider an example of GBP/USD. The pair was trading sideways on January 12, between 00:00-07:15 MT time. When the price touched the lower Bollinger band, we looked at the Stochastic Oscillator. At that time, it entered the oversold zone. We opened a long position at 1.3507. We placed a Stop Loss 10 pips below the entry at 1.3497. Take Profit was located at the upper Bollinger band at 1.3527. We successfully earned 20 pips!
An algorithm for sellers is exactly opposite.
As an example of this strategy, we will look once again at the M5 chart of GBP/USD. On January 14, somewhere between 23:00 and 05:00 MT time the cable was consolidating. We waited when the price touched the upper Bollinger band and the Stochastic Oscillator reached an overbought zone. We opened a short position at 1.3695. This time, we tried another calculation of stop loss. Firstly, we calculated the distance between our entry and the middle Bollinger band (1.3695-1.3688=0.0007). Therefore, our Stop Loss goes 7 pips above the entry level (1.3702). Take Profit goes at 1.3680 (where the price touches the lower Bollinger band). As a result, we earned 15 pips.
Conclusion
The strategy we explained above has several main advantages for you. First of all, it is very easy to implement and it requires only two oscillators. Secondly, it allows you to trade during "sleepy markets" when the volatility is low and you don't know what to do. Finally, it’s scalping, beloved by literally everyone! So, why not give it a try?
Sometimes a chart or a candlestick pattern may provide a decent entry signal if it is located at a certain level. A pin bar is one of the most reliable and famous candlestick patterns, and when traders see it on the chart, they expect the price to change its direction soon.
Among hundreds of different indicators and technical tools for traders, the relative strength index (RSI) is one of the most popular due to its simplicity and, at the same time, its power in various trading cases. In this article, we want to tell you about another powerful tool similar to RSI but with some cool tweaks.
There are a lot of valuable strategies that require the knowledge of candlestick patterns and oscillators. However, not of them are profitable. When you start trading with them, you can face situations when the strategy is not moving your way.
If you are 18+ years old, you can join FBS and begin your FX journey. To trade, you need a brokerage account and sufficient knowledge on how assets behave in the financial markets. Start with studying the basics with our free educational materials and creating an FBS account. You may want to test the environment with virtual money with a Demo account. Once you are ready, enter the real market and trade to succeed.
Click the 'Open account' button on our website and proceed to the Trader Area. Before you can start trading, pass a profile verification. Confirm your email and phone number, get your ID verified. This procedure guarantees the safety of your funds and identity. Once you are done with all the checks, go to the preferred trading platform, and start trading.
The procedure is very straightforward. Go to the Withdrawal page on the website or the Finances section of the FBS Trader Area and access Withdrawal. You can get the earned money via the same payment system that you used for depositing. In case you funded the account via various methods, withdraw your profit via the same methods in the ratio according to the deposited sums.
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