For any trader who is trading in the market, it is still important to know what the trend is, or at least to know if a trend exists at a particular time.

This strategy is designed to provide all the information about the trend that any trader can make better, smarter, and more profitable trading decisions.
This system uses three popular technical indicators:
  • Bollinger Bands
  • Stochastic
  • MACD
However, we will fine-tune them a bit, help them maximize their inherent strength, while also making the confirmation signals better, creating more favorable probabilities for us.
Of course, apart from these indicators, we should use more support and resistance as well as Price Action to further enhance the system's effectiveness.

Specifically, we will set the parameters as follows:
  • Stochastic cycle settings: 5, 5, 3
  • MACD indicator settings: 12, 26, 9
  • Dual Bollinger Bands - both use 20 periods but the standard deviation of one Bollinger Band (BB) is 2 while the other is 1. In our examples, the black BB has a standard deviation of 2 while the blue BB has a standard deviation of 1.
If there is no dual Bollinger Band indicator in your trading platform, you can add 2 BBs where one has a standard deviation of 1 and a BB has a standard deviation of 2.

Order entry rules:
  • The price needs to surpass both upper bands of the Bollinger Bands (in an uptrend) or below two lower bands (in a downtrend).
  • The stochastic indicator must simultaneously have signaled to cut (BB strip up, Stoch indicator must cut up). Ideally, the stochastic crossover occurs from oversold or overbought levels.
  • Final confirmation from MACD: If the Bolinger and Stochastic bands both cut up, the MACD must also show a bullish crossover.
  • "Cross over at the same time" on all 3 indicators will produce a higher probability of success and trades should be made in these cases.
  • It is wise to switch and view lower timeframes before activating the order to try and determine a better entry price.

In the above example against USDCAD, the simultaneous crossover signals the start of an uptrend, bringing in nearly 200 pips of profit with this strategy.

Cutting position:
  • The stop loss is initially placed above/below the Bollinger band with a standard deviation of 1. Therefore, we will place a stop loss below the upper band in an uptrend and above the lower band in a downtrend. The charts below will make this clearer:
  • We may not stop loss if the price breaks above the Bollinger Bands but does not close above/below it.
  • Trades are closed only when the closing price confirms.
  • Note that some trading platforms do not offer a "stop-loss at close" order, so EA can be helpful. Otherwise, you have to cut your losses by hand.