This is a swing strategy that has the ability to identify reversal candlesticks such as dojis, inside bars, bearish and bullish haramis, shooting star, hammer and other candlestick patterns. This strategy is applicable to any currency pairs and is also suitable in a 4-hour and higher timeframe.
Bollinger Band (settings:period 20, standard deviation 2)
Stochastic indicator (13,5,5)
The price may reverse if it will touch the outer lines of the Bollinger band. For sell position, the price must touch the upper Bollinger band and look for the reversal candle to enter a trade. For buy position, the price must touch the lower Bollinger band and wait for the reversal candlestick to open a long position. The middle band can be used as a target profit or to move a profitable trade to a break even point.
The stochastic indicator is used as a filter for the trades.
The price must touch the lower Bollinger band line and may close below it.
The 2 lines of the stochastic indicator must be below 20 or in oversold condition.
The closing candlestick must be a good bullish reversal candlestick.
Once you see a suitable bullish reversal candlestick pattern, place a pending buy stop order 2-5pips above the high of that bullish reversal candlestick pattern.
Stop loss must be placed 10-20 pips below the low of the bullish reversal candlestick. You have to make sure your stop loss is not to close so that you will get stopped out early.
Take profit when the price hits the middle Bollinger band or set a profit target in that area. You can also use the middle band to close half of the profit. Keep the rest running until the price reaches the next target which is the upper Bollinger band.
You can move the stop loss to break-even when price touches the middle Bollinger band, but not really advisable all the time due to the price may be too close and may cause you to get stopped out. Just keep 15-30 pips distance for your stop loss to breakeven.
The price must touch the upper Bollinger band line and may close below it.
The 2 lines of the stochastic indicator must be above 80 or in an overbought condition.
The closing candlestick must be a good bearish reversal candlestick.
Once you see a suitable bearish reversal candlestick pattern, place a pending buy stop order 2-5 pips above the high of that bearish reversal candlestick pattern.
The pitfalls of this strategy:
In a strong trending market, prices will be hugging the upper/lower Bollinger band lines and you may find out you will get stopped out frequently if you are looking for reversals of that trend.
Do not enter using market orders. It is preferable to use sell stop or buy stop orders based on reversal candlestick patterns.
How to install The Bollinger Band Forex Swing Trading Strategy?
Download The Bollinger Band Forex Swing Trading Strategy.zip
Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
Copy tpl file (Template) to your Metatrader Directory / templates /
Start or restart your Metatrader Client
Select Chart and Timeframe where you want to test your forex strategy
Right click on your trading chart and hover on “Template”
Move right to select The Bollinger Band Forex Swing Trading Strategy
You will see The Bollinger Band Forex Swing Trading Strategy is available on your Chart