SOME INITIAL NOTES: 

  • The following strategy can be used on any chart from D1 and below, however, this strategy gave the best results on the H1 timeframe, and therefore, it is best to use it on the 1-hour chart. It is more suitable for major pairs, although there are no restrictions on the currency pairs we can use.
  • Bollinger Bands Strategy - This CCI is not an intraday trading strategy, which means trades can be held as long as the conditions for the trade remain true regardless of what it means we need to hold position overnight.
  • The main goal of the strategy is to benefit from the trends extension and its continuation.

An example of a purchase that uses the system

INDICATORS USED:

For this strategy, we will apply the necessary 2 main indicators:
  • Bollinger Bands set cycle = 100 and standard deviation = 3.
  • The second is the CCI indicator coded by FxTR which accurately identifies trend trends and reversals.
In addition, you can also place additional MACD indicators or ADX indicators below the chart to help you determine the momentum of the trend. Weak momentum can be a sign that trading opportunities are not good and the trade may not go well.

While placing the MACD or ADX is not a requirement for this strategy, they are often useful as both are very good indicators of trend identification and trend momentum. For example, we can avoid transactions where ADX is below 25.

The reason we are using these two indicators is just to support us, but the main signal of this strategy is still the mid-line crossover of Bollinger Band and CCI. So there are many cases where the ADX is below 25 but you can still trade if the signals based on the main setup are fine!

CONDITIONS FOR TRADING:

Enter a buy command:
  • Wait for the price to cross the 100 moving average of the Bollinger Bands (it's the middle band of the indicator).
  • Wait for the CCI indicator to turn blue (up).
  • Start buying when a candle closes above the middle band.
  • It would be better if the ADX is above 25 and the MACD is showing an uptrend.
Stop loss on buy trading:
  • Set your stop loss below the lowest level of the nearest candle located below the middle band of the Bollinger Band indicator (100 moving average).
  • Make sure your stop-loss is less than your profit target (upper range of the BB).
Profit target and exit rules:
  • Take profit target is the upper range of Bollinger Band
  • Or exit when CCI turns red (down)
An example of purchase trading is shown in the chart below:


A buy signal is indicated by an up arrow to the left and an exit signal (take profit) is indicated by a down arrow on the right. In this case, we take profit because CCI custom turns red  1-hour chart of USDJPY

Rules for entering sell command:
  • The price is below the middle range of the Bollinger Band
  • The CCI indicator is down (red)
  • Open a short position when there is a candle closed below the middle range of the BB
  • Also, if the ADX is above 25 and the MACD shows a downtrend, the signal will be more reliable
Stop loss for sale trading:
  • Set stop-loss above the nearest candle above the middle line of Bollinger Band
  • Trade only when the potential risk-return ratio is good. The stop should be less than the distance to the profit target (lower range of BB)
Profit target and exit rules:
  • Take profit target is the lower range of Bollinger Bands
  • Or exit when the CCI turns blue (up)
A sell trade created with this strategy is shown on the chart below:


Sell signals (down arrow on the left side) and exit signals (arrows up to the right) 1-hour chart of EURUSD

GENERAL GUIDELINES FOR THE STRATEGY:
  • The target must have at least R / R = 1 or higher. This is important because many trade setups look perfect but do not fulfill this important condition. Transactions with R / R ratios <1 should not be performed
  • There is no need to exit command while the CCI is in neutral as this could just be noise
  • Avoid closing command when the CCI only executes small movements or if enough profit has not been achieved
  • Pay attention to support and resistance on larger timeframes