The Bollinger Custom Exit strategy, originally designed to trade on EURUSD, uses two Bollinger Band indicators to identify entry and exit positions.
The logic behind this strategy is quite simple. Entry using one Bollinger Band and exit positions using the other. To secure you are not overloaded with trades as soon as the entry rule is true, we have added signal throttling. Finally a tight Stop Loss ensures things never get out of hand.
Indicator description: Bollinger Bands
A Bollinger Band consists of three bands. In the middle of a Bollinger Band is a simple Moving Average - in this case a 20 period Moving Average on the M15 time frame, calculated on Close values. The middle band is a measure of the intermediate-term trend that serves as the base for the upper and lower bands. The interval between the upper and lower bands and the middle band is determined by volatility, measured in standard deviations. When volatility is low the upper and lower bands move close to the Moving Average and when volatility increases the difference between the upper and lower bands increases rapidly.
This strategy seeks to take advantage of changes in volatility and short term market movements. The strategy opens a single position once the EURUSD crosses the "wide" Bollinger Band (set at four standard deviations) and closes it again when the opposite narrow Bollinger Band (one standard deviation) is crossed. A tight Stop Loss at 25 pips ensures the position is closed if the movement is bigger than anticipated. If the Stop Loss is not reached the long position, opened on the lower four standard deviation Bollinger Band, is closed once the upper band on the one standard deviation Bollinger Band is crossed. And vice verca for short positions.
Please notice that when calculating if the price of EURUSD has crossed eg. the four standard deviation, lower Bollinger Band (for long trades), the tick-by-tick Bid price is compared to the previous value of the lower Bollinger Band. On a chart this means the two lines need not actually cross. Read more about how to calculate crossing indicators.
See attached pdf file for the full description of how to build the template strategy.