Bollinger Bands Scalping

Bollinger Bands Scalping Example

Bollinger Bands are a great indicator to show market volatility of a current currency pair. We can use these to scalp a few quick pips when the market is ranging within a narrow band, and the bollinger band is ‘flat’.

Setup

Bollinger Bands Scalping Example

Bollinger Bands Scalping Example

Bollinger Bands with the default settings :

  • period = 20
  • shift = 0
  • deviations = 2

Time Frame

5 minute chart

Entry

When the band is flat:

  • BUY when the price hits the lower Bollinger Band. Set stop loss to 10 pips.

    Sample Trades

  • SELL when the price hits the upper Bollinger Band. Set stop loss to 10 pips.

Exit

Close the BUY trade when the price hits the upper Bollinger Band.

Close the SELL trade when the price hits the lower Bollinger Band.

Currency Pairs

EURUSD and GBPUSD during the UK and US market hours.

Pros

Very easy to follow. The rules are simple and straight forward.
This method can also be easily automated.

Cons

Works well during ranging markets only. Doesn’t work well during trending markets. Determining when the market is ‘flat’ is the key.

Backtesting

link -> backtesting results.

Expert Advisor

In the below expert advisor, a ‘flat’ market is when the previous 1st, 4th and 8th bars all differ by a maximum of 0.5 pips.