I have seen and tested many strategies in my trading history but I have yet to find anything that can guarantee a 50% or higher win rate (And that 50% rate is before fees and taxes!). Bollinger bands do not provide a competitive edge, but rather, provide something more important to a retail trader. Clarity.
Bollinger bands are based on the standard deviation of the price of an asset at the current point. Standard deviation (std dev) is based on normal distribution. If you dont know what this is, thats okay. All you need to know is after 3 std dev 99.7% of prices are included. This can be used as an imperfect probability metric as only 0.3% of price points over the last 200 days lay outside of the green bollinger band shown above.
Regardless of biases, news and other such factors, bollinger bands can be used to guage whether a liquid asset is cheap or expensive.
As seen on the graph above, everybody's favourite asset (BTCUSD) can be traded with this simple 200 day bollinger (3) and (4) on daily price metrics. However, don't use indicators as a ground rule for strategies. Low liquidity assets and small timeframes significantly reduce the effectiveness of bollinger bands. Furthermore, I would not use bollingers for shorting or leveraged positions as the price has no obligation to obey its standard deviation metrics.
I recommend using bollingers on a spot position of liquid assets as displayed in the above graph. (Notice "position" not "Whole account" as all strategies should be)
I use bollinger bands but they don't work so well for entry/exits... Price can easily ride up or down a bollinger band during a fast-moving market phase.
zAngus
⋅
@Dealth, some people will add say a 7 period EMA to the chart and use a close of price below that as their exit. There are a few different ways to do it. I always have a secondary indicator to help with confirmation.
zAngus
⋅
Bollingers are one of my favourite indicators. How I use them is I am looking for stocks that are doing something unusual. I am looking for breakouts. So using the TradingView screener I look to identify stocks where something unusual is happening with their price - eg it has broken and closed above the upper bollinger on the daily or the hourly. I then look at volume using something like the OBV with a 14 period moving average to see if there is unusual volume supporting the unusual price move. Works well for me ;)
Bottom-Feeder
⋅
@Angusmck, Hey there very new to TradingView - how exactly can you set a Screen Up to catch these types of moves?