Scalping is one of the most popular strategies used by forex traders. It allows you to collect huge profits from small but high frequency transactions. In scalping, time matters the most. Therefore, you need a dependable strategy. One of the options is Bollinger Bands (BB) strategy. However, you need the right Bollinger Bands setting for scalping. Otherwise, the information you get is questionable in its accuracy.
Bollinger Bands (BB) is a trend indicator. There are a number of reasons, why the forex traders love this indicator. The most common ones include its ability to read the trend direction and to read the market volatility. In fact, these two points are crucial for scalpers in collecting profits. However, the BB indicator must be combined with other tools, like oscillator, for optimum benefits.
Proper Bollinger Bands Setting for Scalping
Setting up the BB indicator is essential for it to work optimally. The following are some keys for proper Bollinger Bands setting for scalping.
Open the indicator and put some parameters, which include Period, Deviation, Shirt, and Apply to. An accurate Bollinger bands setting for scalping use standard parameters like: Period=20; Shift = 0; Deviation = 2.00; and Apply to =0.
The BB indicator may also be used for Time Frame (Period) of M15, M30, or H1.
Actually, if you use Metatrader platform, it comes with standard parameters, which are dependable for trading. You just need to make sure that the tool is properly used. Now the question, how to use the information provided by the bands?
In a simple way. You can execute sell when the price approaches the upper band and the stochastic indicator crosses the buy-saturated area. On the other hand, buy execution is recommended when the price approaches the lower band and the stochastic indicator cross the sell-saturated area.
As mentioned above, besides proper Bollinger bands setting for scalping, you need to combine the tool with other oscillators for better predictions.