602# Bollinger Bands with RSX reversal trading

Submit by Maximo Trader 30/01/2014

Bolliger Bands with RSX is a reversal trading system adopted also at the trading with binary options High/Low.

Time Frame 5 min or higher;

Markets: Forex and Indicies.

For trading with binary options Expiry time 6 candles.

Metatrader Indicators:

Bollinger bands (20, 2);

ELR color modified version;

RSX(14 periods).

Buy Call or long entry

When the price broken and close the below lower band of the Bollinger Bands wait that RSX has blue bar and ELR color retraces into the the bands and has yellow bar if these conditions are agree buy call at the opening of the next bar.

Buy Put or short entry

When the price broken and close the above upper band of the Bollinger Bands wait that RSX has red bar and ELR color retraces into the the bands and has yellow bar if these conditions are agree buy put at the opening of the next bar.

Money Management with binary options is martingala ratio 2.5:1

examples: 5$ 12,5 30, 75, ….

For trading with this system without binary options you have the same conditions for buy and sell.

For exit positions you have these options:

place initialt stop loss on the previous swing;

make profit at the midlle band;

Profit Target predetermined with ratio 1:2 stop loss.

This strategy has a profitability more higher with trading without binary options.

See examples below in the pictures.

Bollinger Bands with RSX reversal trading

template modified

I add other two bollinger bands (20, 1) and (20,3)

The reason why we use 3 sets of Bollinger bands is because it helps us to be able to determine of the extent of the possible reversal of the movement of the price. When the price move away from the 3° standard deviation Bollinger band and into the zone between the 1° and 2° standard deviation Bollinger bands, we know that the currency pair has hit its extreme point at the moment and is moving into reversal phase.

Buy:

1. when the price close into the zone between the 1° and 2° standard deviation Bollinger bands;

2. RSX has blue bar and ELR color retraces into the the bands and has yellow bar;

Sell

3. when the price close into the zone between the 1° and 2° standard deviation Bollinger bands;

4. RSX has red bar and ELR color retraces into the the bands and has yellow bar.

Make profit at the center band.

Trendignal

Metatrader 4 Trading System IV