This great little system, which I introduced in Newbie Island is given full treatment here.
Settting up
Choose your favourite candle layout. Choose any currency pair and pick your favourite timeframe.
Now add :
a) Bolinger bands - default setting.
b) A MACD with the following.........trigger 9 (or delete - not used)
short set at
21 periods
long set at
100 periods
Weird settings I know.
Entry
Enter with a tag of the upper bb when the MACD is
BELOW zero (contra ian) and go
short
Enter with a tag of the lower bb when the MACD is
ABOVE zero and go long.
Exits
The system gave no exit method so I devised my own after examining the system.
The idea is that you at least catch the middle band (20 period average) and go to the opposite band if you can.
So wait till the trade reaches the middle band, then set a trailing stop. The number of pips trailing depends on your time frame.
If you do get to the opposite band - good for you - more pips!
Stop loss
Measure the distance from your outer band to the middle band in pips.
Halve this distance and thus set your stop loss.
John Bolinger says that this is a "reversal system" and that it delivers "good risk-reward ratios"
END