Trading “Battle of the Bands”

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Trading Battle of the Bands – The Battle of the Bands strategy was originally designed for trading in the securities market, but due to its simplicity and versatility, it was transferred to the forex market. This strategy is based on the impulsiveness of price movement and a few simple forex indicators that are present in any terminal of Metatrader 4.

Recommended time frame H1.

Currency pair can be any.

For trading, we need the following forex indicators:

1. A simple moving average SMA 32 is applied to High, and a simple moving average SMA 32 is applied to Low. These averages form on the chart a channel of moving averages;

2. The trend indicator Parabolic SAR (step 0.02, maximum 0.2);

3. Two simple moving averages of SMA 100 and 200, apply to Close. These are additional indicators (recommended for use, but not mandatory);

4. Indicator Fractals.

Purchase:

1. The price should close above SMA 32 High – i.e. Above the formed channel of moving averages;

2. The price is above SMA 100 and 200 – the recommended condition, but not mandatory;

3. The closing price of the bar should be higher than the opening price of the bar;

4. Price must penetrate into the Parabolic SAR from the bottom up, ie. Parabolic points must jump from top to bottom – under the price;

5. If a Doji candle or a “Pin bar” was formed, the signal should be ignored;

6. If the closing price of the bar is lower than the opening price of the bar – you should wait for the next candle and make sure that all the above conditions are met.

Trading Battle of the Bands

The conditions are fulfilled: the parabolic starts showing the first signal for the purchase, but the price has not yet crossed, it did not gain a foothold above SMA 32 High. And only when this is done, we open the position.

Trading Battle of the Bands – Sale:

1. The price should close below SMA 32 Low – i.e. Below the formed channel of moving averages;

2. The price is below SMA 100 and 200 – the recommended condition, but not mandatory;

3. The closing price of the bar should be lower than the opening price of the bar;

4. Price must penetrate into the Parabolic SAR from the top down, i.e. Parabolic points must jump from below upwards – above the price;

5. If a Doji candle or a “Pin bar” was formed, the signal should be ignored;

6. If the closing price of the bar is higher than the opening price of the bar – you should wait for the next candle and make sure that all the above conditions are met.

Trading Battle of the Bands

The conditions are fulfilled:

on the first candle the parabolic signals and the price crosses SMA 32 Low.

Stop-loss immediately after the deal is placed under the nearest fractal (local minimum) below the average SMA 32 Low – for purchase. Or above the nearest fractal (local maximum) above the average SMA 32 High – for sale.

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As soon as the price went to our side and the next candle closed after the opening of the deal – we fix the profit of 50% of the open deal. Immediately after closing 1/2 of the transaction, we transfer the balance of the position to the breakeven.

Further, a profitable stop-loss, we move each time after the appearance of a new point of the indicator Parabolic SAR. This you can do at the opening of each new candle or use for this purpose a universal trailing stop that will do it for you automatically and faster.

It should be noted that when selling back pulls prices are much stronger than when buying. Therefore, you should choose a trailing stop in accordance with the currency pair.

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