Forex Day Trading System

Love Trading Buy/Sell Arrow Signals? Try This!

Thanks to freeforexguides for this trading concept. Fits nicely with the basic methods of trading bollinger bands that were discussed here.

This system is called Bollinger Barbeque

You need:

GBP/CHF 1H chart
Bollinger bands period 20 with deviations 2.0
Bollinger bands period 20 with deviations 2.5

What is the EMA for?
It is used as our trend indicator.
If price is below EMA, we are only interested in short entries.
If price is above EMA, we are only interested in long entries.

What are the Bollinger bands for?
The price likes to stay between the Bollinger bands almost all the time. But some times the price explodes in either direction, but soon stalls and reverse back to the BB.

We base all our trades according to where price is regarding to the BB bands.

There are two types of trades in this system.

* Based on the outer bands

* Based on the middle band

How to trade?
A picture says more than a thousands words:
Click to enlarge

In this session the price is above the EMA so we are ONLY looking for long entries. Our long entries are excecuted only on green candles at specific areas.

The criteria for long entries that HAS to be met are one of the following:

* Price has touched the lower bands and a green candle has closed inside the BB channel

* Price has been below the middle band and a green candle has closed above the middle band.

When we now know out criterias, look at the picture above and follow.

The price is above the EMA so we are only looking for long entries.

If you look at number 1. That is a trade based on the lower band. The price has been down touching the lower bands, but the trade is excecuted when the first green candle is closed inside the channel. The trade could even had been excecuted at any of the two little candles before.
But an important rule is: only enter long on green candles and short on red candles.

Number 2 is our take profit level. Normally when the trades are based on the outer bands, I take 50% of at the middle band and the rest 50% at the higher bands. But at this trade there was not room to take profit at the middle.

If you look at the candles right after number 2, they are all covering the area between the outer band and the middle. The area between the bands are also quite thin so we DO NOT trade there. That’s usually and indication of a big move. As you can see we get a explosion downwards.

The price is still above the EMA so we are still ONLY looking for LONG entries. After a move like that with the angle of the BB we want to see two green candles, before we go long.

We get our two green candles at number 3, so we enter long with first 50% take profit at the middle band and the rest 50% at the opposit outer bands.

Our TP’s are hit at 4 and 5. When the first TP are hit at number 4, SL is moved to atleast break even. If you do not want to risk your winnings it could be moved closer to the middle bands at round numbers or support/resistance.

At number 6 we see that price has been below the middle band and a little green candle is closed above the band. We enter long with 50% take profit at outer band. The rest 50% we are going to use a trailing stop.

After number 6 the price goes below the middle band but never actually touches the lower bands. (Thats why we have 60 pip SL) When the price breaks the middle band again from below, that often leads to a BIG move upwards. Our first TP is hit at number 7.

When the price decides to rise, we gently move our SL 10-15 pips below the low of the previous bar. That some times leads to massive +200 pips profits

How about short entries?

We are only looking for short entries when price is below EMA250. The criterias for short entries are:

* Price has touched the higher bands and a red candle has closed inside the BB channel

* Price has been above the middle band and a red candle has closed below the middle band.

4 Responses

  1. forex day trading system says:

    Everybody is looking for forex day trading system. Thanks a lot for sharing your thoughts about it.

  2. Jason says:

    Thanks for visiting.

  3. nm says:

    Dear Jason,

    I am new here even in trading , can you advise me on some topics ?
    MACD is good for which time frame and by which settings ?

    RSI is good for which time frame by which settings ?



  4. GreatTradingSystems says:

    No right or wrong answer I am afraid.

    It is all about trial and error and finding a method that allows you a ‘chance’ of making a profit.

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