FREE FOREX STRATEGIES

Scalping ideas (ADX and Bollinger bands)

Scalping with the help of ADX:

To scalp effectively with minimum time spent, Forex scalpers need to know when the market is trending well and when there is nothing to wait for.

To find out about the strength of the market trend use ADX (Average Directional Index) indicator.
ADX does not show the direction of a current trend, it only shows the strength of the trend. Reading below 20 indicates a weak trend, reading just above 20 – gaining new strength trend and reading above 40 – very strong trend.

It is that simple – scalping is weak when the market is weak, when ADX deeps below 20 – opt for other life activities, do not sit and waste your time in Forex.

Scalping with the help of Bollinger bands:

Bollinger bands can help determine trends and especially upcoming trend reversals.
When price moves outside the Bollinger bands it is suggests a continuation of the current trend, while bottoms and tops made outside the Bollinger bands change to bottoms and tops made later inside the Bollinger bands suggest upcoming trend reversal.


http://forex-strategies-revealed.com/


what setting of ADX do you proposed? is it the default?

Yes, default ADX(14) also ADX(20).

I don't understand why ADX is considered so useful. I always have problems with it. Often when it's above 40 and you get into a trade, the trend starts going down and with the trend, ADX too goes down and you end up losing pips instead of making any. Any suggestions to how you tackle this issue?

Although ADX hovering above 40 suggests a strong trend, it is probably better to avoid opening new trades in the direction of a current trend. Otherwise, quite often a situation like yours can be seen: you get into a trade and soon after ADX starts to descend...

Try to balance your system in such way that you can initiate a trade when ADX is above 20 but below 35-40.

Use ADX as a helping tool, a confirmation indicator that would add confidence when entering a trade. However, if your primary indicator or method provides a strong signal and ADX contradicts it, ignore ADX. Make your trading position smaller and initiate a trade.

Regards,
Edward.

thanks ...i will try it but what is the timeframe...5 minute?

It could be 5 min or 1 min for scalping.

Regards,
Edward

Hi Edward


Many thanks for all your strategies. Hopefully sometime I will be able to get some money with Fx.
For now I'm just reading and testing as much as I can, and honestly I'm learning a lot with your help.
I found this Bollinger Bands very helpful, but what the best setting for 5m charts? I'm using 20,2 which is the default in my software.

Cheers from Portugal

Henrique

Hi Henrique,

That's exactly what you need - Bollinger Band with (20, 2) settings.

Regards,
Edward