Bollinger Band Scalping

The Bollinger Band Scalping indicator identifies mean-reversion opportunities by flagging candles that open and close entirely outside of Bollinger Bands, providing a structured system with automated entry, stop loss, and Exponential Moving Average (EMA) based take-profit levels.

Usage

The Bollinger Band Scalping tool is designed for high-frequency trading on lower timeframes, specifically the 3-minute and 5-minute charts. A long signal (labeled "CCSS L") is generated when a candle's open and close are both below the lower Bollinger Band. Conversely, a short signal (labeled "CCSS S") is generated when the open and close are both above the upper Bollinger Band.

Upon a signal, the indicator automatically draws:

• Entry Line: A solid line at the close of the signaling candle.
• Stop Loss (SL): A dashed line based on a configurable percentage.
• Take Profits (TP): Three levels based on the 8 EMA, 12 EMA, and 26 EMA.

A common execution strategy involves exiting 33% of the position at each respective EMA target. The tool also includes a volume filter to ensure trades occur during active market sessions and a wick filter to avoid entries on candles with excessive price rejection.

Details

The script combines Bollinger Bands for volatility and exhaustion detection with multiple EMAs for dynamic profit taking. The core logic relies on "price detachment" from the bands, suggesting a high probability of a mean-reversion move back toward the basis.

The indicator incorporates an optional trend filter using a 200-period EMA. When enabled, long signals are only displayed if the price is above the 200 EMA, and short signals are only displayed if the price is below the 200 EMA. This allows users to align their scalping setups with the higher-timeframe trend.

Settings

• BB Length: Sets the lookback period for the Bollinger Bands calculation.
• BB Std Dev: Adjusts the multiplier for the Bollinger Bands width.
• EMA 1 / 2 / 3: Defines the periods for the three Take Profit targets (defaults are 8, 12, and 26).
• Stop Loss %: Determines the percentage distance from the entry for the stop loss line.
• Max Wick % of Body: Filters out candles where the wicks are disproportionately large compared to the candle body.
• Require above-avg volume: When enabled, signals only fire if volume is greater than the 20-period volume SMA multiplied by the Volume Mult.
• Vol vs SMA20 x: The multiplier used for the volume filter.
• Only trade with HTF trend: Enables the 200 EMA filter to ensure trades align with the long-term trend.
• Show EMAs/BB: Toggles the visibility of the moving averages and Bollinger Bands on the chart.

FAQ

Which timeframes are best for this indicator? The system is optimized for the 3-minute and 5-minute timeframes during sessions with high volatility.

How do I manage the three different take-profit levels? The script identifies the 8, 12, and 26 EMAs as targets. Many traders close one-third of the position at each level as the price reverts to the mean.

How can I access Bollinger Band Scalping? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.