Forex Strategy
Mean Reversion Scalps in Ranges: A Quantified Forex Strategy
1) Identify a Range
- H1 ADX(14) < 18 and price inside 20-day Donchian mid 60%.
- Mark the last 24–48 hours’ high/low; avoid overlapping red news windows.
2) Entry Signals
- Bollinger Bands(20,2) touch/close outside band then close back inside.
- M15 RSI crosses back above 30 (for longs) or below 70 (for shorts).
- Spread ≤ 1.5× average; no news in next 15 minutes.
Idea: Enter on the reversion trigger, not the first stretch.
3) Risk & Exits
- Stop: beyond extreme by
0.75×ATR(M15). - TP1: mid-band; TP2: opposite band or 1.2–1.6R.
- Move stop to breakeven after TP1 or a close through the 20MA.
4) Filters & No-Trade Zones
- Skip if H1 ADX > 20 (trend emerging).
- Skip 30 minutes around top-tier news (CPI, NFP, rate decisions).
- Avoid very tight Asia ranges on Friday afternoons.
5) Trade Management
- Risk 0.25–0.5% per attempt; three attempts max per session.
- Daily stop at −2R; pause trading after hit.
- Record range width, ATR, and outcome for journaling.
6) Playbook
- Confirm range conditions.
- Wait for band poke and re-entry signal.
- Place orders with predefined stops/targets.
- Scale out, then trail lightly; do not overstay.
