The most popular channel indicator is the Bollinger Bands, which are used simultaneously with some kind of oscillator. The principle of trade in the channel is based on the fact that the price, which has no fundamental support, is under variable pressure from bulls and bears. Therefore, its movement will be within certain limits, which the indicator builds on the basis of historical data. And if at the moment of approaching the border, the oscillator does not show overbought or oversold, then a border breakthrough is possible. And what if to reduce the risk of error, use two channel indicators with different formulas? It is this technique that we use in the strategy proposed below.

Trading in the channel for breakdown

This strategy uses two indicators: Bollinger Bands (BB) and STARC Bands (Stoller’s averaged range channel, Stark bands). This indicator is used for intraday strategies (strategy of one day) and is somewhat similar to Bollinger bands. The difference is that in the explosives in the formula, the closing prices and the standard square deviation are used. In the Stark bands, the average true range (ATR) is used, which is better fulfilled at the time of volatility. If volatility increases, the corridor expands, in flat – on the contrary narrows. There are no ideal indicators – each of them has its own advantages and disadvantages. Because the best option is their combination.

The interpretation of the STARC Bands signals is similar to BB: crossing the channel boundaries – opening a position along a strong trend. Or trade in the channel with the assumption of a potential reversal.

Trading Terms:

  • timeframe – M15;
  • asset – any currency pair from the number of liquid;
  • BollStarc combo indicator settings: BB_Period = 20, BB_Deviations = 2, MA_Period = 13, ATR_Period = 21, KATR = 2.0, Shift = 0.

If you did not find this indicator freely available on the Internet, write about it in the comments and we will send it to you by email for free.

The principle of opening a purchase transaction:

  • channel trading time – European session;
  • the upper line of the Bollinger Bands is below the upper stark band;
  • a rising candle pierces without redrawing both edges of the channels.

The larger the candle body relative to past periods, the better. At the next candle you can open a position. Stop-loss set at a distance of 10-30 points. After the profit of 10 points is fixed, we transfer the stop to the breakeven level and start the trailing with a length of 10 points.

The principle of opening a transaction for sale:

  • channel trading time – European session;
  • the bottom line of the Bollinger Bands is located above the bottom of the Stark;
  • A downhill candle pierces both borders of the channels without redrawing.

You can also add an oscillator to this strategy, which would show the state of the market and its volumes. We do not open a position if, after a recent closed deal to buy, another similar signal appeared – it is better to wait until the price rolls back to the middle of the channels. Trading directly in the channel is also possible at the moment of a calm market and with a focus on a rebound from the Bollinger bands.

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