Bollinger Bands Scalping 

The Bollinger Bands Scalping  Strategy is best understood when we gain good insights into the components of the strategy, viz. Bollinger Bands and scalping respectively. That way, the composite picture emerging out of Bollinger Bands scalping will be that much clearer.

Bollinger Bands are bands indicative of high and low trades. They first came to the fore as an optimal technical analysis tool back in the 80s, thanks to efforts made by John Bollinger after whom they are named who eventually even managed to get them trademarked in 2011.

These Bollinger Bands provide a very keen sense of direction when it comes to volatility in trades, with regard to the kind of high or low movement they are likely to witness, with prior trades acting as precedents. Once a keen sense of direction is obtained, trading decisions can be made with greater effectiveness, thanks to the ability to recognize patterns in price movements.

Typically, when you look at Bollinger Bands, there are the two Upper and Lower bands, indicative of higher and lower prices. Alongside there is a moving average over a defined period referred to as N.

As things stand, there are 3 major pointers that emerge out of Bollinger Bands. First there is Bandwidth Delta that looks into differences in the width of bands; Percent Bandwidth that tends to bring normalcy in the width of bands over a relatively longer period of time; and finally, BBImpulse that looks into changes in price as a functionality of both bands.

Now, with this perspective in place, let us look at scalping. Scalping in investor terminology refers to a trading strategy that seeks to capitalize on relatively small price movements. These small movements in price are compensated for by high volume trades. So if you have fractionally small changes in price and yet the trades themselves are plentiful, eventually traders are expected to make returns on their trades.

Therefore, when we look at a composite Bollinger Bands scalping trading strategy we are essentially aiming to get a good grasp over price movements in the markets. Now, by scalping, Bollinger Bands are capitalized upon to the hilt by placing a significant number of trades. That way, even when price differentials are minimal, high volume trades add up to substantial trade margins.

The EUR/USD pair chart below gives you a very good insight into the Bollinger Bands Scalping Strategy

Timing

Making the most of the Bollinger Bands scalping trading strategy mandates a keen sense of timing. Ideally, when the bands tend to slope up, you should go long while when the bands slope down, you should go short. Just in case the bands do not witness much movement and remain rather flat, it may well be a good time to stay away from the markets.

The following chart will give you very good insights on this

Yet, don’t take this as a given; there are circumstances where in spite of the bands being rather flat, it may be suitable to either buy or sell – always assess the situation at hand carefully.

Another important aspect related to timing in the context of the Bollinger Bands scalping trading strategy is the fact that there can be very good profits made really quickly, within say a matter of minutes. This is because you will be placing many trades over short timespans and they would tend to pay out very fast.

Conclusion

When used intelligently and in a disciplined manner, the Bollinger Bands scalping strategy can prove to be a remarkable strategy towards significant trade profits. In case you’re a novice just starting out, begin with smaller value trades, especially if you’re looking at higher volumes. As you get a hang of things – especially with a keen sense of timing, your overall finesse with the Bollinger Bands scalping trading strategy towards your own profits will improve dramatically.