Price reversal band scalping Strategy For MT4
Table Of Contents:
- Price reversal band scalping Strategy For MT4
- The Price reversal band scalping strategy – Long positions
- The Price reversal band scalping strategy – Short positions
- Is the Price reversal band scalping strategy effective for trading forex?
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Price reversal band scalping Strategy For MT4 as the name suggests is a trading system that makes use of price bands and the reversals that occur. The main concept behind using price bands is that the envelope the price action completely.
During times when the price action tends to get extreme, prices tend to move to either the upper or the lower bands of the channel. But following this extreme move, prices then snap back to their averages. This is what is called as mean reversion in trading. It is one of the methods of trading with price action, besides trend and counter trend trading or breakout trading.
The Price reversal band scalping strategy is a rather simple trading system to use, if you understand the concepts of mean reversion. But there is nothing complicated about using this trading system. As you will see in the course of this article, the trading rules are very simple and easy to understand.
Let's now take a look at the indicators that are used in the Price reversal band scalping strategy. Firstly, we have the FPS price reversal band indicator. This indicator is responsible for plotting the price band or the channel that you see around price. The settings are quite minimal and you do not need to further customize the settings.
Next, on the price chart, we have the ultimate bars indicator. This indicator is responsible for plotting the up and down arrows on the price chart. But as you might have noticed, these arrows are plotted a bit too frequently. Thus, it can also provide false signals. But we can overcome this by setting up our trading filters, which is covered in the next section of this article.
Finally, there is the RSI extremus indicator. What this indicator does is that it colors the price bars. The coloring scheme is that it shows blue bars on the price. This means that there is a potential shift in the trend. Note that regardless of which way the market is moving, the appearance of the blue bars signal a potential shift in the direction of the price action.
Moving on, in the first sub window, we have the volatility quality indicator. This is also called as the Ultimate alerts and arrows indicator. This indicator simply plots a single line that changes color. When the markets are moving lower, the indicator plots a pink line. In most cases, you will see the line being plotted near the lower end of the scale. Likewise, when the market is moving up, the indicator changes color and is plotted in blue, near the upper end of the scale.
In the second sub window of the Price reversal band scalping strategy, we have the Fibo trend indicator. This is a trend indicator that is quite customized. It is plotted as a histogram and shows the rising and falling momentum in the price action.
A combination of all the above indicators is what makes the Price reversal band scalping strategy. Let's now take a look at how you can trade long or short positions using the Price reversal band scalping strategy.
The Price reversal band scalping strategy – Long positions
To take long positions using the Price reversal band scalping strategy, we start by looking at price action trading at the extremes. This means that price should typically be trading near the lower end of the price channel indicator that you see.
Following this, you should see prices turning higher. Note that you should see the blue price bars forming before or after price trades near the lower band of the price channel indicator. This suggests that the market direction is shifting.
Now look to the first indicator in the sub window. Here, we need to see the signal line turning blue and trading near the upper end of the scale. Finally, the histogram in the second sub window should also be bullish, as it plots the levels above the zero line.
Now you should take a long position at the market. Using the previous low from the blue price bars, set your stop loss there. Use the upper end of the price channel as your take profit level.
The Price reversal band scalping strategy – Short positions
To take short positions using the Price reversal band scalping strategy, we start by looking at price action trading at the extremes. This means that price should typically be trading near the upper end of the price channel indicator that you see.
Following this, you should see prices turning lower. Note that you should see the blue price bars forming before or after price trades near the upper band of the price channel indicator. This suggests that the market direction is shifting.
Now look to the first indicator in the sub window. Here, we need to see the signal line turning pink and trading near the lower end of the scale. Finally, the histogram in the second sub window should also be bearish, as it plots the levels below the zero line.
Now you should take a short position at the market. Using the previous high from the blue price bars, set your stop loss there. Use the lower end of the price channel as your take profit level.
Is the Price reversal band scalping strategy effective for trading forex?
To conclude, the Price reversal band scalping strategy is a rather effective trading system that you can use. This trading system, as demonstrated is very easy to trade. It is a trend following system that makes use of the reversion to the mean method of trading. Prices tend to snap back and forth as and when they reach the extremes.
Beginners to forex trading will find this a great way to practice both trend following as well as the reversion to the mean method of trading. Due to the few indicators used, the trading template called the FSB template is easy and light weight.
You can use this template to monitor multiple charts at the same time. Besides the FSB template, there is also another template that comes with this trading system. But we find this to be bare bones of the Price reversal band scalping strategy.
Download the complete system description and the files here:
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