This trading signal is based on a combination of 2 Double Bollinger Bands and a Stochastic indicator. This is a strategy that has very simple trading principles and is easy to apply.

When using the strategy, pay attention to the following points:
  • Time frame: M5
  • Bollinger 1: 21
  • Bollinger 2: 89
  • Stochastic: 5; 3; 3
Inside:
  • Bollinger 1 will be an indicator for our main trend identification and Bollinger 2 will be an indicator for larger trend identification. Bollinger 2 will tell us when to and not trade.
  • We use Stochastic to confirm the signal to open a trade. For Scalper, you can still trade without the confirmation signal of Stochastic.
Trading principles:

Note: DO NOT TRADE when Bollinger 1 is in the middle of Bollinger 2 or crosses the middle band of Bollinger 2.

For buy signal
  • When Bollinger 1 is above the middle band of Bollinger 2 and the price is above the middle band of Bollinger 1. We can now watch buy when the price bounces up from the lower band of Bollinger 1 and the lower band of Bollinger 1. Also very close to the middle band of Bollinger 2.
  • Stochastic buy signal: Stochastic must be below 50 or 20 and price slows down in the middle and upper bands of Bollinger 1.
For sell signals
  • When Bollinger 1 is below the middle band of Bollinger 2 and the price is below the middle band of Bollinger 1. We can buy when the price bounces down from the upper band of Bollinger 1 if the upper band of Bollinger 1 is also a very close middle band of Bollinger 2.
  • Stochastic sell signal: Stochastic should be above 50 or 80 and a sign of slowing down in the middle and upper bands of Bollinger 1.
Exit order: Depends on the style of the trader. You can set take profit at 1: 2 ratio or set take profit based on resistance (for buy orders) or support (for sell orders), or you can move the stop loss to follow the trend, ...

Buy order example:


As you can see in the chart above, we will enter buy trades when the price retraces to the middle and lower bands of Bollinger 1 (when it is very close to the middle band of Bollinger 2).

An example for a sell order:


As stated above, we will not trade when Bollinger 1 is in the center of Bollinger 2 or crosses it. That is why in the 2 charts above there are signals we should not trade.