Easy to trade successful strategy for EU 15 minute chart.
Indicators
Bollinger Bands and ADX
Why Bollinger Bands?
Bollinger Bands is a technical analysis indicator created by John Bollinger in the 1980s. The bands
consist of a moving average and a standard deviation above and below the moving average. Typically,
Bollinger Bands are set at 20 period, 2 standard deviations which means that the value of the upper
band is 2 standard deviations above the moving average. The lower band would be 2 standard
deviations below the 20 period moving average.
In the “X-Treme Fade” strategy, we use 2 sets of Bollinger Bands:
20 period, 2 standard deviation
20 period, 3 standard deviation
In statistics, 95.45% of values are suppose to lie within 2 standard deviations of the average while
99.73% of all values are suppose to lie within 3 standard deviations of the mean. In plain english, this
means that a move to the 2nd standard deviation Bollinger Band is rare but a move to the 3rd Bollinger
Band is even rarer.
Our X-Treme Fade strategy looks for the EUR/USD to make an extreme move on a short term time
frame (15 minute chart) by hitting the 3rd standard deviation Bollinger Band.
BUT THAT’S NOT ALL!
Before picking a top or bottom, we want to wait for the EUR/USD to close above the 2nd standard
deviation Bollinger Band for a long trade and below it for a short trade - this is important because it
confirms that the previous move in the EUR/USD is losing momentum.
Why Average Directional Index (ADX)?
The Average Directional Index or ADX measures strength of trend and when picking tops and bottoms,
we do not want the strength of the trend to be overly strong. Therefore, we want the ADX “smoothing
line” which is set at 14 to be less than 25.
ADX setting = 14
Look for ADX < 25
Long Trade Guidelines
*Only look for setups between 4am to 12pm ET (9 - 17 GMT)
1. Look for EUR/USD to close at or BELOW the 3rd standard deviation Bollinger
Band
2. Wait for EUR/USD to rally and close ABOVE the 2nd standard deviation
Bollinger Band
3. Check to see if ADX < 25
If #2 and #3 are true, Buy EUR/USD
4. Place Stop* at 15 pips
5. Close half of position at +15, move stop on rest to breakeven (initial entry price)
6. Trail Stop on remainder of position by 15 pips
Short Trade Guidelines
*Only look for setups between 4am to 12pm ET (9 - 17 GMT)
1. Look for EUR/USD to close at or ABOVE the 3rd standard deviation Bollinger
Band
2. Wait for EUR/USD to fall and close BELOW the 2nd standard deviation
Bollinger Band
3. Check to see if ADX < 25
If #2 and #3 are true, Sell EUR/USD
4. Place Stop* at 15 pips
5. Close half of position at +15, move stop on rest to breakeven (initial entry price)
6. Trail Stop on remainder of position by 15 pips
With the compliments of
Boris & Kathy
Indicators
Bollinger Bands and ADX
Why Bollinger Bands?
Bollinger Bands is a technical analysis indicator created by John Bollinger in the 1980s. The bands
consist of a moving average and a standard deviation above and below the moving average. Typically,
Bollinger Bands are set at 20 period, 2 standard deviations which means that the value of the upper
band is 2 standard deviations above the moving average. The lower band would be 2 standard
deviations below the 20 period moving average.
In the “X-Treme Fade” strategy, we use 2 sets of Bollinger Bands:
20 period, 2 standard deviation
20 period, 3 standard deviation
In statistics, 95.45% of values are suppose to lie within 2 standard deviations of the average while
99.73% of all values are suppose to lie within 3 standard deviations of the mean. In plain english, this
means that a move to the 2nd standard deviation Bollinger Band is rare but a move to the 3rd Bollinger
Band is even rarer.
Our X-Treme Fade strategy looks for the EUR/USD to make an extreme move on a short term time
frame (15 minute chart) by hitting the 3rd standard deviation Bollinger Band.
BUT THAT’S NOT ALL!
Before picking a top or bottom, we want to wait for the EUR/USD to close above the 2nd standard
deviation Bollinger Band for a long trade and below it for a short trade - this is important because it
confirms that the previous move in the EUR/USD is losing momentum.
Why Average Directional Index (ADX)?
The Average Directional Index or ADX measures strength of trend and when picking tops and bottoms,
we do not want the strength of the trend to be overly strong. Therefore, we want the ADX “smoothing
line” which is set at 14 to be less than 25.
ADX setting = 14
Look for ADX < 25
Long Trade Guidelines
*Only look for setups between 4am to 12pm ET (9 - 17 GMT)
1. Look for EUR/USD to close at or BELOW the 3rd standard deviation Bollinger
Band
2. Wait for EUR/USD to rally and close ABOVE the 2nd standard deviation
Bollinger Band
3. Check to see if ADX < 25
If #2 and #3 are true, Buy EUR/USD
4. Place Stop* at 15 pips
5. Close half of position at +15, move stop on rest to breakeven (initial entry price)
6. Trail Stop on remainder of position by 15 pips
Short Trade Guidelines
*Only look for setups between 4am to 12pm ET (9 - 17 GMT)
1. Look for EUR/USD to close at or ABOVE the 3rd standard deviation Bollinger
Band
2. Wait for EUR/USD to fall and close BELOW the 2nd standard deviation
Bollinger Band
3. Check to see if ADX < 25
If #2 and #3 are true, Sell EUR/USD
4. Place Stop* at 15 pips
5. Close half of position at +15, move stop on rest to breakeven (initial entry price)
6. Trail Stop on remainder of position by 15 pips
With the compliments of
Boris & Kathy
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