“3 Time Period Bollinger Bands Strategy” is a modification of A. Elder’s famous “Three Screens” trading strategy. The strategy is simple and very effective. To work, you need to open 3 timeframes in separate windows: H4, H1 and M5, wait for the confirmation of the signal to open a position in all windows in the same direction. This forex strategy is applicable to any trading instrument. To determine when to enter the market, we use moving averages and Bollinger bands.
Settings and operation principle
First window
Build order. Set the H4 timeframe. Add a moving average EMA with a period value of 20 to the close prices.
Interpretation. We open positions in the direction of EMA (20), namely:
Long – when the price is above the EMA (20).
Short – when the price is below the EMA (20).
Second window (main)
Build order. Set the H1 timeframe. Add three moving averages with corresponding periods EMA (5), EMA (10), EMA (15) for close prices.
Interpretation. We open positions at the intersection of moving averages, namely:
Long – when the EMA (5) passes upward from the EMA (10) and EMA (15).
Short – when EMA (5) passes from top to bottom EMA (10) and EMA (15).
Third window
Build order. We set the timeframe M5. Add Bollinger Bands (set standard settings, adjust if necessary).
Interpretation. As soon as signals appear and coincide in direction in windows H1 and H4, open the corresponding position in the window (M5).
• Long – the price goes down to the lower border of the Bollinger price channel (the price is below the middle line and above the lower Bollinger border), or touches the middle line (the price is above the middle line and below the upper Bollinger border).
• Short – the price rises to the upper border of the Bollinger price channel (the price is above the middle line and below the upper Bollinger border), or to the middle line (the price is below the middle line and above the lower Bollinger border).
Limitation of losses
• Long – Select Stop Loss below the local price minimum.
• Short – Stop Loss is selected above the local price maximum.
Exit position
• Long – the moving average EMA (5) goes from top to bottom the moving average EMA (10) and EMA (15).
• Short – the EMA (5) moving average passes the EMA (10) and EMA (15) moving average from bottom to top.
