(+) Scalping Strategies

BOLLINGER-RSI SCALPING STRATEGY

Trading the Forex majors—preferably EURUSD and GBPUSD—using Bollinger Bands and RSI.

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 TRADING STRATEGY

■ Style: Scalping Strategy

■ Name: Bollinger-RSI Scalping Strategy

Note: 

(1) The strategy produces low reward-to-risk trades, which can be unfavorable for most intraday traders.

💱 FINANCIAL ASSETS

■ GBPUSD best (or EURUSD)

Note: You may also apply this strategy to other Forex assets, provided they offer tight spreads that won’t negatively affect your P/L ratio.

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 TIMEFRAME

M1 timeframe (1-Minute)

■ 8-10 daily trades

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 INDICATORS & SETUP

This strategy is implemented using Bollinger Bands and the RSI.

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.

You can use the following 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 a simple scalping strategy combining two popular indicators:

■ (↑) Long Trades

• When GBPUSD reaches the lower Bollinger Band, you prepare to trigger a long (bullish) trade.
• An RSI reading of 30 serves as the trigger for the long trade.

■ (↓) Short Trades

• Conversely, when GBPUSD reaches the upper Bollinger Band, you prepare to trigger a short (bearish) trade.
• An RSI reading of 70 serves as the trigger for the short trade.

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 TRADING ORDERS

Here is how we set the Bollinger Scalping Strategy:

■ Take Profit: 5-7 pips

■ Stop-Loss: 10 pips

■ Profit/Loss Ratio: 0.5-0.7 (low)

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CHART: Bollinger-RSI Scalping

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■ Bollinger-RSI Scalping Strategy

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