Bollinger Bands Contrarian Scalping Method

Bollinger Bands Contrarian Scalping Method: a trading strategy for quick profits

The Contrarian Scalping Method is a trading strategy designed for rapid trades with dynamic profits. It relies on Bollinger Bands and moving averages to capitalize on swift returns toward the moving averages. This versatile strategy can be applied across various time frames.

Setup Strategy

Time Frame: use a time frame of 3 minutes or longer.

Currency Pairs: Suitable for major currency pairs, stock indices, and major cryptocurrencies with low spreads. If applying this strategy at lower time frames, ensure that the spreads remain low.

Technical Indicators:

Bollinger Bands: Set with a deviation of 2.0 and a 20-period calculation.

Simple 34-Period Moving Average (MA): Based on closing prices.

Simple 100-Period Moving Average (MA): Also based on closing prices.

Trading Rules for Contrarian Scalping

Trades are generated in the opposite direction of the prevailing trend.

Specifically, when the price exits the Bollinger Bands and subsequently re-enters, trading opportunities arise.

Buy Conditions

Trend Up: Confirm that the 20-period MA, 34-period MA, and 100-period MA are all pointing upward.

Wait for the price to exit the lower band of the Bollinger Bands and then return.

Important Note: The re-entry candle (in blue) must be at least half the size of its full amplitude; otherwise, the setup is invalid.

Sell Conditions

Trend Up: Ensure that the 20-period MA and 34-period MA are above the 100-period MA.

Observe the price exiting the upper band of the Bollinger Bands and subsequently returning.

Important Note: The re-entry candle (in red) must be at least half the size of its full amplitude; otherwise, the setup is invalid.

Exit Position

Set a profit target based on the moving averages in relation to the risk.

Determine the stop loss based on the chosen time frame and currency pair.

Additional Tip: Enhance Your Filter Strategy

Analyze the indicators and draw a horizontal line at an appropriate filter level relative to the time frame. Use discretion in this step.

Examples of trades.