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Trading Strategy

Bollinger Band Trading Strategy

Bollinger Band Trading StrategyBollinger band trading strategy can be used by traders for a number of purposes and that is part of their appeal. Novice traders can use them for simple trading methods or expert traders can take advantage of the data they provide to perform more complicated analysis on the market. One of the best uses of the bands is predicting price breakouts. With the correct analysis the Bollinger band breakouts can be incredibly useful to traders because they can indicate that entering the market could be a bad idea if the direction of the breakout is unknown. On the other hand it would be wise to play the market if the direction of the breakout is made clear.

Advanced Bollinger Band Trading Strategy

It is generally conceived that securities usually trade within a range for the majority of the time. Bollinger bands are one of the best indicators at demonstrating this because often the price of a security will rebound off the upper and lower band over extended periods and this is considered to be trading within a range. However there are occasions when the range is broken and often when it is it can create a drastic change in price and market direction. This is known as a price breakout and being able to accurately predict this breakout is essential for any trader hoping to make significant money. They can combine the trade ranging analysis with price breakout analysis to signify that a breakout is likely to happen and this information is invaluable to any trader.

Bollinger bands

There are a number of characteristics which must be present in order to accurately analyze a potential price breakout whilst using Bollinger bands. Firstly the volatility of a security should be very low. This is indicated by the space between the upper and lower bands being very narrow. Once these two bands are very constricted they should ideally both be heading in a horizontal direction. When the bollinger band trading strategy behave like this it suggests that a price breakout is imminent and the market is very likely to move far out of the current trend. In this situation a trader can either decide to leave the market because they are unsure of the direction of the price breakout or they can try and play the market to potentially make plenty of profit.

Method of Playing the Market

A basic method of playing the market in this situation is to place a pending buy and sell either side of the current price. This ensures that no matter which way the breakout occurs a position in the market will be triggered but this could be subject to a fake movement whereby the market initially moves in one direction and then changes to its true course.

Another way of predicting the direction of the breakout is by using other indicators in conjunction with the bollinger band trading strategy. This is often a more reliable route and can help a trader feel more confident when making a move in the market because the evidence is more substantial.


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Trading Strategy

Bollinger Bandit Trading Strategy

Bollinger Bandit Trading StrategyIn this article, we will outline a simple and profitable bollinger bandit trading strategy which is easy to understand and learn and can be used by anyone to seek big Forex profits. Let’s take a look at the strategy and how it works in greater detail.

Profitable Bollinger Bandit Trading Strategy

If look at currency trading charts you will often see short accelerated price moves away from the main trend and these are caused by greed in a bull market and fear in a bear market. These spikes though are short lived and prices soon return back to more realistic values. Our strategy is a swing bollinger bandit trading strategy which will take advantage of these price spikes and turn them into profits – so how do we trade these price spikes?

Focus On the Bullish Market

  • Look at you charts and wait for a steep rise in price away from the main trend and then you need to look to sell into it but timing is of course critical – so to time your entry, you need to do two things – check how overbought the market is and then, you need to generate your trading signal so lets look at how to do this.
  • If you want to find out how overbought a market is, you can use some momentum oscillators and while there are many you can use, three of the best are the MACD, the stochastic and the RSI. By just looking at them you can see how overbought the market is and if it is overbought, you need to generate a trading signal and this is easy to do if you look for divergence.
  • If a market is trending strongly both prices will be rising and so will momentum but when prices go to far to quickly, they will eventually correct and the way to get an advance warning of this is to look for momentum to turn down as prices continue to carry on rising. This is known as divergence and you can then trade short.
  • You put your stop above the price high and set a downside target where you think prices will retrace back to and this is normally above a key level of support NOT at it. You never want to risk the price bouncing back against you so you get out a bit early and take your profit.

You Can Use to Make Huge Regular Trading Profits

While the above sounds a very simple bollinger bandit trading strategy it can make a lot of money and if you are selective and only trade markets which are at overbought extremes, you will have the odds on your side and can make big gains.

Swing trading is very easy to understand and because humans will always be subject to the emotions of greed and fear prices will always be pushed to far to fast to the upside or downside and if you learn how trade into these price spikes you can make huge regular profits.…