The Bollinger Band strategy is one of the easiest and most accurate tactics for intraday trading. Both of its tools are included in the set of basic MT4 indicators and the essence of their use will be understandable even to the novice trader. The indicator is calculated based on the standard deviation from simple MA. It forms a channel within which the price moves. Channel breakdown will speak about a strong price movement, a rebound – a reversal. An additional oscillator confirms market conditions and investor sentiment.
Intraday Trading for New Traders
Bollinger Bands – an indicator of price volatility changes. It is sometimes sometimes referred to as oscillators, although in full it is not. MACD is a trend instrument that determines the potential price strength, the likelihood of a reversal and the future direction of the chart. The combined indicator created on their basis has some advantages:
- reduces graphics congestion with lines and allows you to quickly react to a potential signal;
- practical in terms of visual perception. Potential market entry opportunities are marked by dots of different colors depending on the upward or downward trend.
You can download the indicator for free on the Internet by setting the name of the Bollinger Bands MACD indicator in the search box. The optimal timeframe of the Bollinger Band strategy is M30, the currency pair is any.
The principle of entry into the market for the purchase:
- The indicator displays the RED point under a part of the chart of the same color. There may be several points; the more, the better;
- after this condition, a GREEN point appeared above the RED segment on the next candle. Sometimes a dot may not be drawn immediately (through a candle) – this is normal.
At the next time interval we enter the market. Stop-loss is better to put at a distance of about 10 points. We deduce 50% of the position after making a profit of 15 points, the rest is fixed by trailing at the level of breakeven (that is, the length is 15 points).
A short position opens under opposite conditions. First, the indicator draws green dots above the blue line, after which a red dot appears below it. The position does not open when the channel width visually seems narrow compared to previous periods. Settings are optimized for each currency pair separately.
The strategy of a Bollinger band based on a combined instrument is conservative. The risk level is minimized, with successfully selected indicator periods, more than 80% of the signals turn out to be profitable. After testing a strategy on a demo account, it is recommended to launch it on a cent account. If you have any questions, ask them in the comments!