surangadesilva

Maximize your Profits with Bollinger Bands

FX:USDCHF   U.S. Dollar/Swiss Franc
23124 43 44
Bollinger Band Strategy is One of the Most Profitable Strategy Used by the Trades who earn lots of Money!!!

You can't just use Bollinger Bands to Trade and Earn Money as you need to confirm the Break Out Signal that you get after a Bollinger Band Squeeze.

Here are some tips how to confirm that:

1. Always looks for Bollinger Band Squeezes as you will find Price Break Outs most of the times
2. Use RSI to confirm the Price Break Out
3. Make sure RSI is not Overbought/Oversold to have a Major Price Break Out
4. Look for Bollinger Band Width to see whether its Rising as well
5. When there's a Major Price Break out it will go on for 1 -3hrs so you can take multiple entry points to Maximize your profits
6. Always check the Support/Resistance levels as there's possibility of the Price reversing the other way
7. I would also recommend to check the investing.com and look for Strong Buy/Sell Signal before you enter your Trade
8. There will be fake break outs where the price go the otherway
9. You can have stop losses and enter the Trades on the otherway if there's a fake breakout

Few other Tips to Enhance the above:

1. Use default MACD to reconfirm the Trend Direction (Thanks for the Idea from HamzaLeith)
2. Check the Direction of the Upper/Lower Bands.

For Bullish reversal's and continuations (opposite is true for bearish reversals or continuations)

1.) Price approaches the Buy Zone and the upper and lower bands remain flat. Reversal - Likely a sharp reversal to the lower band. Because both bands are flat this will likely be short lived.

2.) Price approaches the Buy Zone and the upper band goes up and the lower band is flat or moving up slightly. Continuation - Price will likely continue up slowly for a time.

3.) Price approaches the Buy Zone and the upper band goes up and the lower band goes down. Continuation - Price will likely move up fast and furious. This is the best continuation pattern for the bands. This is a rapid expansion of volatility. You will experience "fake out's" sometimes but most of the time this set-up will produce some good profits when executed properly.

4.) Price approaches the Buy Zone and the upper and lower bands both go down. - Reversal - This is likely to result in a reversal

Source: http://www.eezybooks.com/StoreFront/Bollinger-bandssecret.aspx

Summary: Use RSI / Bollinger Band Width & MACD Indicators to Confirm the Signal

Hope this Helps Anyone who like to maximize the profits
HamzaLeith
2 years ago
Thank you for the effort, really seems like a good strategy, I think that it can be used in combination with other strategies for extra confirmation as well
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surangadesilva HamzaLeith
2 years ago
Yes you need a combination of other indicators as well and that's why i quickly check investing.com which checks with 11 indicators / 12 types of moving averages (See here: http://www.investing.com/technical/technical-studies) and gives a overall result.

When you combine this with Bollinger Band that you should be over 70-80% success.

I would like to improve this strategy so if you see anything that you think that help to improve this, please comment. Thanks
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HamzaLeith
2 years ago
You could add 2 MACD's for extra confirmation of momentum. A 12,26,9 and 30,60,30. I think the direction of the MACD's combined with your strategy should definately give you extra confirmation at these breakout area's. Cheers
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surangadesilva HamzaLeith
2 years ago
Kool. Thanks for the Idea
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HamzaLeith
2 years ago
You are welcome. I will definitely test your strategy
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surangadesilva HamzaLeith
2 years ago
Kool. Let me know how it goes. This works with both Spot Forex & Binary Options
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HamzaLeith
2 years ago
Sure, I will start testing it, could you please ad a snapshot of the graph above with these MACD's I told you about, to see how that looks like. You can send it to me in a PM if you don't like to post it here :). Thank you
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I think you are missing out some facts. On this chart you present only perfect entries and exits, but you do not present the whispsaws. At 15:15 you say that the bear move is over, as RSI is oversold and price has gone past the daily support (I don't know how this break of support qualifies as a bullish signal), but you don't say anything about what happens at 14:15. The signal is basically the same, only difference is price. The BBW is almost at the same level, the RSI is oversold (below 30) and there is a hammer at the daily support. Why would you not take this as a long signal, but only the 15:15? Probably because this is trading in the middle of the chart, not at the right edge. I'm not saying this strategy doesn't work, but when you make a review of a strategy you should take into consideration both the whipsaws and the good signals!
+1 Reply
surangadesilva vlad.adrian
2 years ago
Good Point. Thanks for pointing out this as this will help to improve my strategy to be more accurate.

I think you can overcome this if you add a Bollinger Band with Stardard Deviation 1 so that the sell zone is between the below 2 Bollinger Bands and the buy zone is between the upper 2 Bollinger Bands. Middle area which is between SD -1 and +1 is "No Mans Land" and this is where you shouldn't trade or have stop loss setup. See the screenshot here:
snapshot


Also you can read more about this here: http://www.investopedia.com/articles/trading/05/022205.asp

Hope this helps
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vlad.adrian PRO surangadesilva
2 years ago
You didn't get my point, look here :
snapshot


No strategy will give only perfect signal, there will always be whipsaws. If such a strategy would exist, you would own the world :))
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surangadesilva vlad.adrian
2 years ago
Yes there will be whipsaws and you wont be 100% successful but there are ways to get arounds for few of them to make you 70-80% successful. See here:
snapshot


Let me know what you think ? Thanks
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vlad.adrian PRO surangadesilva
2 years ago
Well, yes this is something else. On this chart, you dont enter and exit exactly at the tops and bottoms, unlike the main chart. Now this looks like a real strategy!
+2 Reply
surangadesilva vlad.adrian
2 years ago
Thanks for you contribution to this strategy to improve it further. Thats why I like about Tradingview where you can share your ideas and tweak your own strategies which will help other people as well :-)
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chungy11 surangadesilva
2 years ago
Hi there, how did you get those blue buy and sell zones showing on there?
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chungy11 chungy11
2 years ago
Also, what are your bollinger band settings set to?
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surangadesilva chungy11
2 years ago
You can view this video to get a better idea about the Double Bollinger Bands Strategy here: http://www.fxacademy.com/learn/double-bollinger-bands-(dbbs)

Also see my other reply with the settings that you should have for your Bollinger bands

Hope this helps. Please share the idea if this works for you. Thanks
Reply
surangadesilva chungy11
2 years ago
Just Setup 2 Bollinger Bands:

1. Bollinger Band (BB) with Period of 20 and Standard Deviation 1 (Lets Say this is your BB #1). Then select your preferred color (orange in my example)
2. Bollinger Band (BB) with Period of 20 and Standard Deviation 2 (Lets Say this is your BB #2). Then select your preferred color (blue in my example)

Sell Zone: Between the Lower BB#1 and BB#2
Buy Zone: Between the Upper BB#1 and BB#2
Neutral Zone: Between the Upper and Lower BB#1 (Don't Trade Here / Take Profits Here)

Like I mention above you can read more about this Double Bollinger Band Strategy here:
http://www.investopedia.com/articles/trading/05/022205.asp

Hope this helps

+1 Reply
HamzaLeith surangadesilva
2 years ago
The strategy is evolving nicely!!, Suranga you could alter the format of the MACD to histograms to make it even more clear, and remember the 12,26,9 MACD, although it seems off but when you get its DIRECTION aligned with that of the 30,60,30 MACD at these BB squeeze area's, usually that is when the big breakouts in the Markets occur. The first MACD represents short term PRICE ACTION and the custom MACD is more indicative of Market direction (you could say a little more longer term). You probably already know this but I thought maybe it is good to emphasize the MACD's functions one more time. Keep up the good work!!
+2 Reply
surangadesilva HamzaLeith
2 years ago
Check the buy & sell signals that you can take when it reaches the neutral zone in this screenshot:
snapshot


Planning to develop this more to get more accurate signals using other indicators as well :-)

Thanks for your contribution
+1 Reply
HamzaLeith surangadesilva
2 years ago
Suranga I've been testing the Bollinger Bands for two weeks now, using them mainly as a trigger in combination with median line analysis...the results are amazing. Wanted to thank you for highlighting their use!!
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surangadesilva HamzaLeith
2 years ago
Yes I have found that:

For Buy - 20 SMA line should be flat or moving up
For Sell - 20 SMA line should be flat or moving down

to have successful trades. Only problem is that you miss trades when you go through the currency pairs manually so I found a solution for that:

I'm using www.timetotrade.eu to have popup/email.sms alerts so that I will not miss any important trades. Hope this will help you as well.
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HamzaLeith surangadesilva
2 years ago
That is great news I will check it out!
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surangadesilva HamzaLeith
2 years ago
See here: http://forum.timetotrade.eu/threads/alert-when-long-candle-rises-above-the-lower-bollinger-band.374/

You can basically create multiple alerts based on price, trendline, technical analysis, volume or candle stick chart conditions. If trading view can integrate the alerts like this I would be really happy!
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HamzaLeith surangadesilva
2 years ago
you can set this up per pair specifically per time frame?
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surangadesilva HamzaLeith
2 years ago
yes the free one would allow you to create upto 10 alerts so that for an example you can setup multi condition alert when certain conditions are met: http://wiki.timetotrade.eu/Multi-Condition_Alert

and yes you need to have one alert per currency pair but multi condition comes as a group for that currency pair which counts as 1 alert out of 10 free alerts. Also you can have the multi conditions in different times frames if you want but as a short term trader I have it all in 5min time frame.

What I like about that is you can pretty much automate almost anything that you want to trigger an alert

Check here: http://wiki.timetotrade.eu/Category:Technical_Analysis_Alerts
and here: http://wiki.timetotrade.eu/Category:Technical_Indicators



+1 Reply
HamzaLeith surangadesilva
2 years ago
Thanks!!
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KevinT
2 years ago
I notice you are using 5 min time frame. Will an higher time frame provide more accuracy?
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surangadesilva KevinT
2 years ago
Yes you always need to check higher time frames to get a bigger picture but when you actually want to trade (15mins - 1hr short term trades) it better if you change that back to 5min chart, otherwise you will miss entry point.
Reply
HamzaLeith
2 years ago
Guys I wanted to show you something very typical of the use of bollinger bands. It is called a head fake. After the squeeze of the bollinger bands a breakout always occurs. However what is very characteristic with bollinger bands is that many times trades get "tricked" regarding the direction of the breakout by something called a Head Fake. I think we are witnessing one of these right now with the GBPUSD. Take a look at a chart and let me know when you don't understand what I mean or perhaps disagree with with me so we can all learn.. Good luck guys.
snapshot
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HamzaLeith HamzaLeith
2 years ago
Sorry here is the right image...
snapshot
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surangadesilva HamzaLeith
2 years ago
Yes I have come across the Bollinger Band head fakes after Bollinger Band Squeeze when you expected a breakout/breakdown on the same direction. This is what I think is the best to over come this.

If anyone can Contribute their ideas to enhance this it will help anyone who is interested with this Strategy I guess.

I'm Using this example to Discuss this HeadFake:
snapshot


As you can see there was a downtrend to start with which didnt last long and then there was a long running uptrend.Most importantly I check Trend Angle of the 20 Period Simple Moving Average (20SMA) with MACD and this is what i check for the Trend Angle and MACD:

Trend Angle:

It is very important to zoom into the correct time frame to check the Angle.(Check my screenshot)
I'm doing 30min Trades for Breakouts so that I zoom the Chart to 30mins (Using Mouse Scroll) to have 30min time intervals on the bottom of the chart so that the Angle is accurate for the Trade that I'm doing

MACD:

For Breakouts (Uptrends) I check to make sure that MACD blue line is not crossed under red line so that the Trend can reverse downwards even the Angle is over 20degrees. If the MACD blue line is over Redline and the Angle is over 20degrees then i BUY.I do Opposite for Breakdowns (Downtrends)

Here's more detailed explanation using the Example:


1. BREAKDOWN - DOWNWARD TREND

- I checked the Trend angle but it's not over 20degress so I ignore that.
- I kept monitoring the Angle to see whether it goes over 20deg but it doesn't
- Ended up with a Headfake and Trend Reverse the otherway

2. BREAKOUT - UPWARD TREND

- I checked the Trend angle but i wait until it's over 20degrees.
- Price went over 20 degrees and I checked the MACD and Blue line is over Red line
- I wait until the Price come down to Upper Bollinger Band with Stard Deviation 1
which is the lowest position that I can take and then I buy for 30mins
- I wait for more price touches Upper Bollinger Band with Standard Deviation 1
- While the Angle is still over 20degress and MACD Blue line crossed Red line I BUY again
This is not that recommended but this is my last BUY of this Uptrend
- As soon as Angle goes below 20degrees with the MACD Blue crossed below Red Price Reverse
very quickly
- After the MACD blue line cross down the Red line it's not that safe to BUY if
the Angle is less than 20degrees. Check the Chart below:

snapshot


Summary:

- Zoom the Chart to see the correct Time Intervals on the bottom before checking Angle
- Keep checking the Trend Angle and dont Trade until the Angle is 20Degrees
- Trade until when the MACD blue line is not crossed under Red line (For Uptrend)
- You can take a risk to have your Last Trade is when the Trend Angle is still above
20Degrees but MACD Blue line Crossed the Red line for Uptrend of course (Opposite for Downtrend)
+1 Reply
HamzaLeith surangadesilva
2 years ago
Great input!!! very nice addition to this strategy...do you know if it would work on the 1hr or 4hr chart? will the rules for the angles remain the same?. Also I take it that you only buy if the price is ABOVE the SMA? or sell below?
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HamzaLeith HamzaLeith
2 years ago
and another perhaps silly question but how do you measure the angle??
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surangadesilva HamzaLeith
2 years ago
Good Question... This Angles I have back tested only for short term trades like 15/30 but for 1hr/4hr angle may be little bit less than that. Best to check in which angles the breakout works and which cases the headfake happens the most. So that you can get a idea what the best angle that you need to use.

To check the angle you just select the Trend Angle tool and draw a line on the middle bollinger band from the previous candle position to the next candle position (so that you get angle for last 2hrs for 1hr chart as the one candle is 1hr and 8hrs for 4hrs chart as one candle is 4hrs)

In my case I have 5min chart for 15min/30min Trades (Chart should be 3-6times less which is recommended by my Binary Options Technical Analyst) so I guess you have 1hr chart for 3-6hr Trades and 4hr chart for 12-24hr Trades ?

When there's a breakout (uptrend) you only buy if the price is in the buy zone (between the upper bollinger band standard deviation 1 & 2). Also when there's a break down (downtrend) you only sell if the price is in the sell zone (between the lower bollinger band standard deviation 1 & 2).

Hope this make sense :-)
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surangadesilva surangadesilva
2 years ago
Also the best place to BUY in a breakout (Uptrend):

-between upper bollinger band with standard deviation 1 & 2
-as soon as the price reverse and hits the upper bollinger band with standard deviation 1 (lowest point of the uptrend)

Opposite for SELL
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HamzaLeith surangadesilva
2 years ago
So I changed the scale of my 4hr chart to resembel your strategy with the 30 min trade. I had to lock the scale in order to keep the angles remain the same. That is how a headfake looked like..I guess the 20 degree is viable for all timeframes
snapshot
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HamzaLeith HamzaLeith
2 years ago
much better example.
snapshot
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HamzaLeith HamzaLeith
2 years ago
snapshot
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HamzaLeith
2 years ago
This is a great article on reversal trading (signals) with Bollinger bands... enjoy
http://www.harmonictrader.com/price_patterns3d.htm
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HamzaLeith HamzaLeith
2 years ago
http://www.fxkeys.com/how-to-use-bollinger-bands-in-forex-and-stock-trading/
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mesandipchavan
2 years ago
SImple Great!!!. Previously I was using only BB with Std Deviation 2....Now with addition of BB with Std Deviation 1 has improved by script.
It works great for Futures.

Thanks a Lot
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mohangbox
a year ago
Really useful..
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francisAA
10 months ago
Am a starter, am madly in love with Bollinger___The way you explained your thing is fantastic.....but some how am still confused so I was asking do you have a video on this your Bollinger band Tutorial (like having it on youtube or some where)
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