Bollinger Bands Trading Strategies Put To The Test

Of course, you are allowed to use any parameters you like, but you should remember that if you change the number of standard deviations to 2. Opening a position on June 13 allowed traders to enter right before the turnaround. Effectively it is equivalent to a Golden Cross system only long trades with closes above the upper BB used as entry points. Like the previous examples, the next trading day was a down day; this one was a bit unusual in that the selling pressure caused the stock to go down heavily. One of the first indicators I put to the test was Bollinger Bands. It must be noted, however, that the results do depend on getting good price fills on the open. So, I wanted to do my own research and I looked at the most recent price swings of Bitcoin in the Tradingsim platform.

Day Trading with Bollinger Bands. Day Trading Uptrends with Bollinger Bands. Bollinger bands help assess how strongly an asset is rising, and when the asset is potentially losing strength or reversing. This information can then be used to help make trading decisions. Here are three guidelines for using Bollinger Bands in an uptrend.

Bollinger Bands Trading Strategy Two

There is a compounded annualised return of just 4. When short positions are taken out and the system is run long only, the performance improves, to 5. As mentioned earlier, Bollinger Bands can be used in many ways and you could write a whole book just about Bollinger Bands strategies alone.

The exact sell criteria is not shown so I will assume that we exit the stock when the reverse occurs. To test this strategy I have also included some extra liquidity rules so that we avoid thinly traded penny stocks , a ranking rule in order to choose between signals and a market timing rule so that we do not trade during a bear market.

In addition, we will spread risk so that we can hold up to 20 positions at one time. This data includes delisted tickers and is adjusted for corporate actions. As you can see from the results of the test, the strategy was able to return The high win rate of this strategy makes it appealing and the idea looks to have potential.

It must be noted, however, that the results do depend on getting good price fills on the open. I tested the strategy again using the buy price as half-way between the open and the high, and the sell price as half-way between the open and the low, and the annualised return dropped to 3. To improve this system I would suggest looking more closely at the entry price and ranking mechanism. This is a bit trickier to model using the simulator.

But it is possible to come up with a strategy by specifying the number of higher opens or closes above the upper band. Or by the number of lower opens or closes below the lower band. The strategy uses the open price to calculate the default Bollinger Band parameters 20,2 and trades are entered on the same day close.

And it uses a liquidity filter to avoid thinly traded penny stocks and the like. Choose lowest ranked signals first. The results show a One of the reasons why the strategy works well, however, is that it relies on trading on the close. This might be a more accurate representation of the price fills we would actually get when trading the system. Overall, the results are pretty good. With some decent tools and a little bit of discretion there may be some potential to be found here.

Below is the full equity curve from But what if those tags occur when the stock is already in an uptrend? Maybe there is a possibility that a close below the bottom Bollinger Band could actually be a good time to trade the pullback? If you want to learn how to trade profitably with a step by step trading approach and a powerful trading system, take a look at our premium trading courses.

Man your articls on indicators are always beyond imagination and expectations. You are too good let me endorse your work. I have read and agree to the privacy policy. 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. This could give you a more accurate place to make an entry point. As I said, the 4 hour and 1-minute time frames are the preferred time frames for this strategy. Yes, there is less of an opportunity for a trade, but the signals are very strong when you are in a higher time frame.

Always remember to be placing a stop loss, and having a good target area. With this strategy, we recommend using a pip stop. The Bollinger bands are a great indicator to use in any market. When you combine these with the RSI indicator, it should give you great entry points. Here is another strategy called trading volume in forex. Something else you can consider is when the price touches the middle band you can make a second entry to press your winners. This can potentially give you double the profit.

With this strategy, we only use the one trade that we initially make, but if your rules allow you to make multiple trades at a time with the same currency pair, then adding a second position at the middle line may be something you would want to consider. Tap here to read another great trading strategy! This one requires no indicators, just pure price action!

Please leave a comment below if you have any questions about Bollinger Bands Bounce Strategy! Grab the Free PDF Strategy Report that includes other helpful information like more details, more chart images, and many other examples of this strategy in action!

Please Share this Strategy Below and keep it for your own personal use! Something that will look like this: How to use Bollinger band indicator Bollinger Bands are well known in the trading community. Tap here for another RSI trading strategy article These indicators should come standard on your trading platform.

The currency must fall back from the uptrend and touch, or almost touches, the bottom band. Once the price touches the bottom or top band, look a the RSI indicator for confirmation.

Once the Price hits the lower Bollinger band, look at the RSI indicator and it should be between and be rising. Once you see this movement you go ahead and look for an entry.

Your take profit can be when the price touches the other Bollinger bands. Conclusion The Bollinger bands are a great indicator to use in any market.

Chart analysis with Bollinger Bands ®

Learn a simple day trading strategy using Bollinger Bands and MACD by Markus Heitkoetter. Two indicators and two steps to profit from intraday trends. Bollinger Bands Overview. I know what you are thinking, "Oh no, not another boring intro on a technical indicator." I created this post to help people learn six highly effective Bollinger Bands trading strategies they could start using immediately. Bollinger Bands can be used for intraday trading purpose. This is simple and profitable strategy. You can get signals everyday from this strategy. In Bollinger Bands indicator, you will see 20 SMA as a middle band acts as support and resistance.