Bollinger Bands Trend Trading System is yet another great innovation of the trend following strategy because it has proven that combining as low as two simple but highly effective Forex indicators can create a profitable Forex trading system. It has made the chart reading easy and the signal reading even easier through its less complicated chart demonstration.
Bollinger Bands Trend Trading System is a combination of world famous momentum indicator the Bollinger Band and the 50 EMA. It suits with any Forex currency pair to trade on and fits great with all sorts of timeframe charts.
Bollinger Bands Trend Trading System Overview
After the installation of Bollinger Bands Trend Trading System at your Forex MT4 terminal, your trading chart will be appeared as the following image:
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Bollinger Bands Trend Trading System Anatomy
- Bollinger Bands: Almost every professional trader around the world knows about this astonishing momentum based trading tool. Bollinger Band consists of three technical tools:
- Upper Band: Works as dynamic resistances. Price reaches its area signals the overbought condition of the price momentum
- Mid Band: Known as the engine of the Bollinger Band. Price hold above its level signals the bullish momentum and holding below its level will indicate the bearish momentum as well.
- Lower Band: It is treated as the dynamic support to the price levels. Once price reaches such area, it is considered that the current momentum is carrying the oversold condition of the market.
- 50 EMA: This is a 50-day period Exponential Moving Average. It works as a trend decider but in a very simple way. Price closing above its level signals the bullish trend and in a contrary, price closing and holding below the EMA level signals the bearish trend.
Check Over: Most Successful Forex Trading Strategy
Bollinger Bands Trend Trading System: Buy Parameters
- Price level is holding above the 50 EMA level
- A bullish bar forms right above the Mid band
- Trigger the buy entry above conditions are met
- Set stop loss limit below the Mid Band or 50 EMA level
- Exit long/take profit once price hits the Upper Band area
Bollinger Bands Trend Trading System: Sell Parameters
- Price level is holding below the 50 EMA level
- A bearish bar forms right below the Mid band
- Trigger the sell entry above conditions are met
- Set stop loss limit above the Mid Band or 50 EMA level
- Exit short/take profit once price hits the Lower Band area
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