Scalping is one of favorite trading strategies in forex. The strategy is the choice among new and experienced traders as it is user-friendly. In addition, the risk is lower as the traders are making small pips but in high frequency. In scalping, time matters the most. Therefore, traders need the right Bollinger Bands settings for scalping. The trading strategy will work better when all the requirements and settings are met.
Bollinger Bands Settings for Scalping: Requirements
Scalping strategy works based on a market environment, where the range is defined by flat or aligned Bollinger Bands. The preferred Bollinger bands settings for scalping include the following:
Use of default 20-period
Time frame is 5 minutes
Trading sessions are EUR and US
Currency pairs are EUR/USD and GBP/USD
After meeting the requirements, traders can set the Bollinger Bands for trading by using scalping strategy.
Bollinger Bands Settings for Scalping Trading
For buy position, the Bollinger bands must be in range trading, namely, almost flat. In this case, the price must be low (overbought), touching the lower band. Open BUY position. The stop loss is set at 10 pips, below the entry price. Then, make sure the trade is closed at the upper band.
Just like buy position, the Bollinger Bands must also be almost flat for sell position. To get the target profit, take a look at the price and make sure to open SELL position when the price is touching the upper band. Then, stop loss is set at 10 pips above the entry price. Finally, the trade is closed at lower band.
As always noted, Bollinger Bands cannot work optimally as a stand-alone trading analytical tool. As the market environment is changing, other indicators are necessary to make sure the traders make informed trading decisions. This way, they can minimize the risk of loss.