(+) Day-Trade Strategies

BOLLINGER-RSI DAY-TRADING STRATEGY

Trading the Forex majors by combining the Bollinger Bands and RSI.

 TRADING STRATEGY

■ Style: Day-Trading Strategy

■ Name: Bollinger-RSI Trading Strategy

FINANCIAL ASSETS

■ Forex Majors

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 TIMEFRAME

■ M5 timeframe (5-Minutes)

■ 5-7 daily trades

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 INDICATORS & SETUP

As the name of the strategy suggest we shall use two indicators, Bollinger Bands and RSI. This is an easy to implement trading strategy which may prove considerably profitable given the right market conditions.

Setting the Bollinger Bands and RSI:

■ Bollinger Bands

At a Glance: Bollinger Bands

'Bollinger Bands' is a volatility-based technical indicator composed of a middle simple moving average (SMA) and two outer bands set at standard deviations above and below the SMA. These bands expand during periods of high market volatility and contract when the market is calm. Traders use Bollinger Bands to identify overbought or oversold conditions, assess trend strength, and anticipate potential breakouts—especially when a “squeeze” occurs, signaling a likely sharp price movement.

Settings:

(i) 12 Periods instead of the standard 20 periods

(ii) Deviations 2

(iii) Shift 0

■ RSI

RSI Explained

The RSI or Relative Strength Index is a momentum oscillator that ranges from 0 to 100. The indicator measures the magnitude of recent price changes and help traders to identify overbought conditions (above 70-75) and oversold conditions (below 25-30). The RSI also highlights potential trend reversals through divergences and signals momentum shifts when crossing its centerline.

Settings:

• The standard settings (14,9)

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 TRADING SIGNALS

This is how you can implement the Bollinger-RSI Day Strategy, which can also be used for scalping.

■ (↑) Long Trades

• When EURUSD reaches the lower Bollinger Band and RSI is at 30 or below, you execute a long (bullish) trade.

■ (↓) Short Trades

• When EURUSD reaches the upper Bollinger Band and RSI is at 70 or above, you execute a short (bearish) trade.

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 TRADING ORDERS

Setting the Bollinger-RSI Scalping Strategy:

■ Take Profit: 50-70 pips

■ Stop-Loss: 20-25 pips

■ Profit/Loss Ratio: 2.5

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CHART: Bollinger-RSI Day-Trading

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■ Bollinger-RSI Day-Trading Strategy

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