Currency: GBP/JPY or USD/JPY (though i use it mainly on gbp/jpy:
Timeframe: 1M, 5M, 15M
Indicators: 3 sets of bollinger bands:
Period 50. Deviation 2 (RED)
Period 50. Deviation 3 (orange)
Period 50. Deviation 4 (Yellow)
Once you load your template you will notice the three sets of bollinger bands. Now, price will constantly range between these lines.
Sell strategy:
When price crosses the upper red band , at least half way to the orange band (if it gets to the yellow band is better but not as usual) Then the price will tend to retrace towards the center of the bollinger bands, you profit form this retracing.
Buy Strategy, it is the same as selling, the difference is that we will wait for the price to range between the lower red and yellow bands, and trade the retracing towards the center.
Tips: do not trade on ranging ,or quiet markets, do not trade previous to news releases. Go for 5 to 10 pips. Great system to trade between opening of london session and the closing of the japan session.
Stop Loss: since this strategy requires you to look at the screen (remember this is the 1M time frame) I tend to have two kinds of stops: time based and loss based.
Time based: Try and figure out how long will it take the market to get in your expected direction, if the time that you planned is already due, then close the order. No point on waiting for a loss…
Stop Loss: Since you are trading a very tight time frame your stops should also very very tight. Sometimes, you will profit from a 3 minute trade and you wont be able to set a proper S/L. So your stops will be given to you by your money management system…
I’ve seen a very similar system using just two bollinger bands:
Period 20. Deviation 2
Period 20. Deviation 3
It’s very much exact with the same entry and exit rules. I’ve seen the success of this system but the 1 minute chart is not good to trade unless the market has constant big up and down movements. Higher time frames like the 5 and 15 minute charts are more reliable. I don’t think I’m allowed to post any links but I read about the system in a Investopedia article, called ‘Bollinger Band Turn Trade’ or something like that
My father in-law is practicing this system so I will be keeping an eye on it and will keep an eye on this thread to monitor your success. I hope it works for you !!
Does this work with other currency pairs? GBP/JPY has a big spread and seems to be a poor choice for scalping. This system does seem to work, however. But it might be more profitable if we can use a pair with a tighter spread.
This is an extremely rewarding scalping technique. It seems to work on almost all the standard pairs, not just the GBP/JPY.
It seems to produce winners very quickly. Definitely good for grabbing 4 - 10 pips and getting out.
I think this strategy would be excellent with a tight trailing stop loss EA and using .1 - 1 lot depending on your account size.
If you can place 10 of these trades a day and your account is big enough to use a standard lot, you can easily make 400 - 1000 bucks a day.
10 trades shouldn’t be a problem in one day. S/L is tricky with this method. It’s almost impossible for the trade to turn extremely against you, so I would advise a larger S/L to allow for a moderate amount of cushion. Just make sure your R/R ratio is appropriate.
