88# Bollinger Bands and RSI Scalping Trading System
Submit by joy22
The most important part of this system is having
small spread (spread is the amount of pips the
broker charges you to make a trade) I have found a
broker with amazingly small spreads which makes
this system even easier to use. I only trade the
EUR/USD with this system, I’m not saying that it
does not work on any other pairs but I only need to
trade one pair.
Select a EUR/USD 1M chart with OHLC for the bars,
it should look like the following chart.
The first indicator we are going to use is the
Bollinger Bands, once you are in your Oanda demo
account click on add study and select Bollinger
Bands with the parameters 21 and 2. You will notice
that these act as support and resistance as price
penetrates the Bollinger Bands it normally retraces
at least back to the centre line and more often
than not it will get to the opposite Band.
Using Bollinger Bands on their own is far from
profitable, we also need to know when the price is
oversold at the same time as it is outside the
The Second indicator we will be using is the RSI or Relative Strength Indicator. Click on add study and select RSI and set it to 14. You are now set up perfectly for scalping the EUR/USD lets go over the rules of this system and look at some examples of the system in action.
IMPORTANT: You must only trade this system between 2am to 5am EST, 8am to 12am EST and 7.30pm to 10pm EST. Make sure you check the spread before you
start trading to ensure that you have 1.5 pips. Do not scalp 30 minutes before a orange or red news report and not for a hour afterwards.
What we are looking for between these times is for price to move above the upper or lower Bollinger Bands and RSI raise above the 70 line or below the 30 line at the same time. Lets look at a chart.
As you can see price stalled at the centre line, I only got 3 pips on this trade however I hardly ever go for more that 4-5 pips per trade but please remember there are trade setups all the time.
The first trade here hit my stop but the second
trade was a good 7 pips so overall I was in
positive. I just wanted to show you that this
system will produce some losses but it is very rare
that the second entry is a loss too.
Is a 2 hour session that yielded about 20+
pips overall, I however only took 10 pips and then
Finding entries and exits is only half the battle
you MUST manage your money well in order to be
profitable overall. I never use more than %3-5 of
my account on any one trade so if I have $10,000 in
my account I am willing to risk %5 which $500 so
for a stop of 5 pips we can trade 1 standard lot or
$10 a pip. Then once I have made 10 pips for the
day I stop trading.
Oanda will let you use micro lots so each pip is
0.10c, don’t worry if you don’t have $10,000 to fund your account yet, you can start with as little
as $500 and build your account over time!
I use a 5 pip stop on all my trades, the reason for
this is that it makes my win/loss ratio about 1:1
and I feel uncomfortable if my loss goes above 5
pips due to the amount of money I am trading.
Lets go over the rules once more to be sure you
First and most important you must check the time
you are trading, it must be between 2am to 5am EST,
8am to 12am EST and 7.30pm to 10pm EST.
Then you must check that there are no major news
releases due out for the USD or EUR during the time
you are planning to trade.
Do not scalp 30 minutes before a orange or red news
report and not for a hour afterwards.
A buy signal is triggered when price goes outside
the lower Bollinger Band and RSI goes below 30.
A sell signal is triggered when price goes outside
Every trade has a 5 pip stop and I normally aim for
the centre line of the Bollinger bands or 3-4 pips
The following rules are for when you have a good
understanding of the system, these rules help me
pull more pips out of the market and bring the
system from around 80% win ratio to a 90%.
If you see the market is in a strong trend down do
not enter a buy position until price has penetrated
the centre line of the Bollinger Bands up to ensure
the trend is over.
The same rule applies for a strong up trend, do not
enter a sell position until price has penetrated
the centre Bollinger Band.
This does not happen very often if you are trading
during the times I have set out. Below is an
example of a strong down trend.