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Bollinger Bands ® Explained – The Best Trading Indicator

While the configuration is far simpler than many other indicators, it still provides you the ability to run extensive optimization tests to try and squeeze out the last bit of juice from the stock. I'm not sure if this is because there aren't many people interested or if other traders stay out of the bands arena because John is so actively evangelizing the bands. Well, in this post I will provide you with six trading strategies you can test to see which works best for your trading style. There was one period in late November when the candlesticks slightly jumped over the middle line, but the candles were red and immediately rolled over. You must honestly ask yourself will you have the discipline to make split second decisions to time this trade, just right?

Bollinger bands help assess how strongly an asset is falling, and when the asset is potentially strengthening (to the upside) or reversing. This information can then be used to help make trading decisions. These three guidelines, similar to uptrend guidelines, .


They were created by John Bollinger in the early s. The purpose of these bands is to give you a relative definition of high and low. So in theory, the prices are high at the upper band and then are low at the lower band.

Bollinger bands include three different lines. The upper, middle, and lower band. The middle band basically serves as a base for both the upper and lower. They are mainly used when determining when there are overbought or oversold levels. Selling when the price touches the upper band and buying when the price touches the lower band. The spacing in between the lower, upper, and the middle band is determined by volatility. The middle band consists of a 20 period moving average, while the upper and lower are two standard deviations below and above the moving average in the middle.

All standard deviation means is that it is a statistical measure that offers a great reflection of the price volatility.

When you see the band widen that simply means that there is volatility at that time. When the price moves very little, the band will narrow which means that there is little volatility. I prefer to use this trading strategy using the 1 hour or 4 hour time chart.

After examining the picture, it may seem wise to buy every time the price hits the lower band or sell every time the price hits the upper band. This can technically work, but is a risky way of trading using the Bollinger Bands. Sometimes strong trends will ride these bands and end up stopping out many unfortunate traders who used that method. Also read the way bankers trade in forex market.

The RSI indicator is used in this strategy to see how the currency is weakening or strengthening. Tap here for another RSI trading strategy article. These indicators should come standard on your trading platform. There is no need to adjust these, as we will use the default settings. Here You can learn on How to fade the momentum in Forex Trading. The only element would suggest performing before you start, is to draw a horizontal line on the You will find out exactly why soon.

You can close your trade when price reaches overbought or oversold area. For buy entry, you need to close when price touches higher bands. For sell entry, you need to close your trade when price touches lower bands.

You can set pips stop loss for every trade. For following this strategy, you need to follow money management theory. You must wait for complete breakout of 20 SMA for take any type of entry. So you need to make some practice on this strategy on demo account, then you can use it on your real account. Security Trading, Forex, Options, Futures and Commodities are highly leveraged products which involves large potential risks. If efficient money management,is not practiced then there are possibilities that you may lose your capital Margin Call in a matter of days or even minutes.

Before making any transaction, you should ensure yourself that you fully understand the risks involved in the Forex Market. We provide Forex signals and forecasts by the experience on different market conditions, price action, market sensitivity, strategies, analysis and other trading rules; though we we cannot assure you that every signals will gain you profit due to the unpredictable nature of the financial market.

Let me walk you through the points 1 to 5: There are two types of tops that you need to know about: This signal is usually accompanied by an RSI divergence 2 During a consolidation, price spikes into the outer Bands which get rejected immediately The screenshot below shows both scenarios.

I am trading in metals. Does your course apply in the trading of Metals also? I would like to do your premium trading course but the link no longer work. Hope to hear from you soon. Hi Annelize you can join here http: Post a Reply Cancel reply.

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Chart analysis with Bollinger Bands ®

Bollinger Bands are a powerful technical indicator created by John Bollinger. Some traders will swear trading a Bollinger Bands strategy is key to their success (if you meet people like this be wary). There are no holy grails or free lunches in the business of trading). The bands encapsulate the . Bollinger Bands can be used for intraday trading purpose. This is simple and profitable strategy. This is simple and profitable strategy. You can get signals everyday from this strategy. Dec 29,  · How to use Bollinger band indicator. Bollinger Bands are well known in the trading community. You can get a great bollinger band formula with a simple trading strategy. They were created by John Bollinger in the early s. The purpose of these /5(6).