Strategy for scalping the Japanese yen on Bollinger Bands
The proposed trading strategy is focused on working with the high volatility currency pair GBP/JPY and USD/JPY using Bollinger Bands.
Input parameters:
- Currency pairs: GBP/JPY, USD/JPY
- Timeframe: M1, M5, M15
- Trading time: any, preferably between the opening of the London session and the closing of the Japanese session
- Type of strategy: scalping
Used indicators: Bollinger bands (bollinger bands)
- Period 50, deviation 2 (red line)
- Period 50, deviation 3 (orange line)
- Period 50, deviation 4 (yellow line)
Principle of trading strategy:
Trading is done on a window with a time interval of 1 minute, five- and fifteen-minute intervals are necessary in order to monitor the overall picture and notice a powerful trend before you start playing against it.
Do not start trading in calm markets or during a lull (so you can just waste time), and do not trade before the release of important financial news, so as not to get caught up in a sudden whirlwind of events. Withdraw profits in small portions of 5-10 pips.
Stop Loss in this scalping strategy is constantly adjusted manually.
Due to the fact that trading happens very quickly, you need to keep a close eye on the market. You can choose two ways to set a stop lossEither close a position as you feel that you have collected sufficient profit (i.e. without even waiting for any losses to appear), or set yourself a maximum trading duration, limiting yourself to a few minutes.
Opening a position for sale
When the price line crosses the upper red Bollinger Band and reaches at least to the middle of the distance between the red and orange bands (and ideally even touches the yellow line, although this does not happen very often) - this is a sure sign that the price will start to recover and go down further, which means that it is the right time to sell.
Opening a buy position
The same rules apply as for selling, except that the price line must cross the lower, not the upper red ribbon. The deeper the price line goes behind the red line, and ideally even crosses the orange and yellow line, the better.
According to the experts at ForTrader.org, since in this scalping trading strategy, you make money on the peaks and bounces of the price, you should hardly be concerned that its value may fall below the last minimum peak or rise above the last maximum peak in the short term (1, 3, 5 minutes). However don't take too long to get out of the trade.
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