Cutting Points: Sideways Market Scalping

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Cutting Points: Sideways Market Scalping

The “Cutting Points” strategy is a mean-reversion scalping system designed specifically for calm, sideways markets. It combines Bollinger Bands with ADX and RSI to identify overextended price moves that are likely to snap back to the average on the M5 timeframe.

Strategy Profile

Timeframe

M5

Condition

Flat / Range

Indicators

BB + ADX + RSI

1. Indicator Setup

Configure your chart to identify low-volatility reversal zones:

  • Bollinger Bands: Period 20, Deviation 2.
  • ADX (Average Directional Index): Period 14.
  • RSI (Relative Strength Index): Period 7.

2. Long Entry (Buy) Rules

  1. Price Location: Price touches or falls below the Lower Bollinger Band.
  2. Oversold: RSI (7) is below 30.
  3. Trend Filter: ADX is below 30 (indicating a weak trend/flat market).
  4. Trigger: Open Buy when the price returns above the Lower Bollinger Band.
Cutting Points Scalping Buy Strategy
Figure 1: Buy Signal – Reversal from lower band in a flat market

3. Short Entry (Sell) Rules

  1. Price Location: Price touches or rises above the Upper Bollinger Band.
  2. Overbought: RSI (7) is above 70.
  3. Trend Filter: ADX is below 30.
  4. Trigger: Open Sell when the price returns below the Upper Bollinger Band.
Cutting Points Scalping Sell Strategy
Figure 2: Sell Signal – Reversal from upper band in a flat market

Trade Management

  • Take Profit: Target the Middle Bollinger Band (20 SMA).
  • Quick Scalp: Alternatively, take 3-5 points profit.
  • Stop Loss: 3 points beyond the Bollinger Band involved in the trade.

Profit from the Range: Turn quiet markets into gains and earn rebates on every trade.

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