The MACD and Bollinger Band Trading Strategy For Binary Options

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Bollinger Bands and MACD Strategy – The Trend is Your Friend Strategy

Making the trend your friend is much easier when using the Bollinger Band and MACD Strategy.

The Moving Average Convergence Divergence is a versatile trading oscillator which is widely used. There have been many trading strategies that have been developed based off the MACD oscillator. The primary use of the MACD is to basically enter the trade in the direction of the trend, after asserting the trend.

When combining the Bollinger Band and MACD, it can create a simple yet powerful short term trading strategy. The trader employing this trade set up using MACD and Bollinger Bands simply uses the trend determined by the slope of the Bollinger Band while also combining the Band’s expansion and contraction. Thus, in most cases, using the MACD and Bollinger Band enables traders to enter ahead of a powerful breakout, which if judged correction can offer quick profits within a short span of time with the trade moving in your favor.

The ease of use that comes with these two trading indicators makes it easy for traders at all levels, although beginners to trading should apply this trading set up over a period of time in order get more familiar with the trade set ups.

Bollinger Band and MACD Strategy Explained

As the title suggests, the MACD oscillator is used with the default settings of 12,26,9 and the Bollinger Bands are set to 30 with 2 standard deviations.

The charts are clean when using this trading strategy as illustrated below.

Bollinger Bands and MACD Strategy

Bollinger Bands and MACD Strategy – Buy/Sell Trading Rules


Buy Signals Trading Rules

  1. Price must touch down to the lower Bollinger Band
  2. When prices bounce off the lower Bollinger Band, the MACD histogram must crossover above the 0-line
  3. Go long on the candle close with stops at the nearest low
  4. The more upward sloping the Bollinger Band is, the more powerful the signal is
  5. Exit partial profits at 1:2 Risk/reward ratio and once the partial exit is made, move to break even and trail stops below the lower Bollinger Band

Sell Signals Trading Rules

  1. Price must touch the upper Bollinger Band
  2. When prices bounce off the upper Bollinger Band, wait for the MACD histogram to crossover below the 0-line
  3. Go short on the candles close with stops at the nearest high
  4. The more downward sloping the bands are the better for the trade
  5. Exit partially at 1:2 risk reward ratio and move the stops to break even, trailing the remainder of the position to the outer Bollinger Band

Bollinger Bands and MACD Strategy – Buy/Sell Setup

Bollinger Bands and MACD Strategy – Buy Setup

  1. Price fall down to the lower Bollinger Band from point 1 to point 2
  2. A few sessions later, the MACD crosses above the 0-line signaling a buy trade
  3. Long positions are entered on the close of the candle with stops set to the nearest low
  4. The first target is set to 1:3 risk/reward which is reached
  5. The remainder of the target is now set to break even with stops trailed along the lower Bollinger Band, which eventually gets stopped out at point 6

Bollinger Bands and MACD Strategy – Sell Setup

  1. Prices rallies from the lower Bollinger Band to the upper Bollinger Band marked by points 1 and 2.
  2. A few sessions later, the MACD crosses below the 0-line, triggering a sell signal
  3. Short positions are entered at the candle close with stops to the nearest high at point 2
  4. The first target is set to 1:2 risk/reward set up, marked by the thick horizontal line
  5. The trade is then moved to break even for the remainder and trailed to the outer Bollinger Band, where the remaining trade gets stopped out for another small profit

Bollinger Band and MACD Strategy

As illustrated above, this is a very simple forex trading strategy that combines two of the most commonly used trading indicators. It is ideal to trade on H1 time frame and higher and can offer a great way to trade merely by the simply trade management rules that are built into this trading MACD and Bollinger Band trading strategy. As with all strategies, longer time frames like 4H or even 1D might work out much better as compared to 1 min timeframe.

Простая стратегия (Bollinger Bands, MACD)

Стратегия основана на сигналах встроенных индикаторов Bollinger Bands и MACD. Для обоих индикаторов используются настройки по умолчанию. Рекомендуемый таймфрейм — H4.

1. Bollinger Bands

Основная идея этой стратегии в том, что верхняя и нижняя полосы Боллинджера являются областями перекупленности и перепроданности соответственно. После прорыва верхней или нижней линии цена стремится вернуться назад к средней линии индикатора.

Сигналом на покупку является прорыв нижней скользящей средней.

Сигнал на продажу — прорыв верхней скользящей средней.

Если гистограмма индикатора MACD пересекает нулевую линию сверху вниз, это является сигналом на продажу.

Переход гистограммы из отрицательной зоны в положительную служит сигналом на покупку.

Торговая стратегия применяется к валютной паре GPB/USD и основана на сигналах, полученных.

Стратегия на основе показаний свечей четырех разных таймфреймов.

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    Bollinger Bands and MACD

    In the last article I talked about Forex trading with the help of one particular indicator, focusing on the fact that professionals use several indicators to filter out false signals. For those who are just starting Forex trading, but just wants to use professional tools, a consolidated Bollinger Bands MACD was created.

    Strategy of Bollinger Bands and MACD

    Bollinger Bands MACD – is an indicator, which includes two popular technical analysis tool:

    • channels (bands) of Bollinger is an indicator measuring the volatility of prices. Relates to oscillators, to determine whether price is high or low compared to the moving average for a certain period of time;
    • MACD – trend indicator moving average convergence (divergence), to determine the potential strength of the price chart at the time of reversal, the probability of reversal of the potential direction of chart.

    Download archive with template of strategy and indicators used

    Strategy of Bollinger Bands and MACD based on the fact that the indicator at the same time includes a tool that determines the price behavior and showing how much MACD deviates from its normal value.

    Trading conditions:

    • Timeframe – 30 minutes;
    • Currency pair – Euro/US dollar;
    • Trading platform – Metatrader 4.

    Parameters of Bollinger Bands MACD indicator:

    • FastLen = 12 (a period of fast moving average MACD);
    • SlowLen = 26 (the period of slow moving average MACD);
    • Lenght = 10 (setting of Bollinger Bands indicator);
    • barsCount = 5000 (the number of bars on which to build the value of the indicator);
    • StDv = 2,5 (the deviation of the Bollinger Bands from the middle of the channel).

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    The conditions for opening a buy transaction:

    • important condition: the indicator has drawn a few red dots in a row under the red line;
    • additional condition: in the first or second candle after the execution of the “main” terms above the red line indicator draws green dot;
    • stop-loss – 10 points.

    Open a long position on the next candle.

    Partially (50%) exit the market when the profit is equal to 15 points. Move the stop loss to the breakeven level, set the floating trailing stop at 15 points. Closing 50% will get a fixed guaranteed profit, and trailing stop on the remaining 50% “squeeze” position, squeeze the maximum profit to the price reversal in automatic mode.

    Deal for sale opens the same way. Wait, when the following conditions are met:

    • the indicator has drawn a few green dots in a row above the blue line;
    • on the next candle has a red dot below the blue line.

    Open a position on the next candle.

    The indicator works fine on this currency pair with a specified timeframe. Other currency pairs the strategy of Bollinger Bands and the MACD is also able to yield good results, but require individual selection of indicator parameters. Not advisable to trade if the Bollinger bands are too narrow relative to previous periods (as shown below).

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