Double bollinger bands strategy pdf

How to Use Bollinger Band Indicators - Learn This Simple Trading Strategy

 

double bollinger bands strategy pdf

Oct 29,  · Double Bollinger Bands Strategy is a mechanical trading strategy. It means it doesn’t need analysis and interpenetration to decide whether the formed trade setup is strong enough to enter the market, or it is weak and you’d better to skip it and wait for a better one. It is either black or white. Bollinger Bands + RSI, Double Strategy This strategy uses a slower RSI with period 16 to sell when the RSI increases over the value of 55 (or to buy when the value falls below 45), with the classic Bollinger Bands strategy to sell when the price is above the upper Bollinger Band and falls below it (and to buy when the price is below the lower band and rises above it). Dec 29,  · If you have been looking for Bollinger band trading strategies that work, you are going to want to pay special attention. This special strategy teaches you how to read Bollinger Bands and Bollinger Band signals. You'll also learn about Bollinger Bands squeeze, double Bollinger bands strategy, Bollinger Bands secrets, and more/5(20).


Bollinger + RSI, Double Strategy (by ChartArt) by ChartArt — TradingView


Then something happened. I realized after looking across the entire internet yes, double bollinger bands strategy pdf, I read every pagethere was an information gap on the indicator. Well, that my friend stops today! In this guide, I am going to share with you a wide range of topics from my favorite Bollinger Bands trading strategies all the way to the big question that has been popping up lately — how to use bands to trade bitcoin futures.

There is a lot of compelling information in here, so please resist the urge to skim read. For all you Audi driving, no foam latte traders, feel free to skip to Chapter 2. Now back to our regularly scheduled program.

Bollinger Bands are a powerful technical indicator created by John Bollinger, double bollinger bands strategy pdf. Some traders will swear trading a Bollinger Bands strategy is key to their success if you meet people like this be wary.

The bands encapsulate the price double bollinger bands strategy pdf of a stock. It provides relative boundaries of highs and lows.

This trend indicator is known as the middle band. Most stock charting applications use a period moving average for the default settings. Double bollinger bands strategy pdf upper and lower bands are then double bollinger bands strategy pdf measure of volatility to the upside and downside. They are calculated as two standard deviations from the middle band.

The below chart illustrates the upper and lower bands, double bollinger bands strategy pdf. Bollinger Bands So, if I were to attempt to translate the last few paragraphs in plain speak, to minimize the number of global eye rolls, the Bollinger Band indicator was created to contain price the vast majority of the time.

From my own trading experience, it is rare for a security to trade outside of the bands. What is the Ideal Bollinger Bands Settings? Double bollinger bands strategy pdf of the trading platform, you will likely see a settings window like the following when configuring the indicator. Bands Settings If you are new to trading, you are going to lose money at some point. This process of losing money often leads to over-analysis. While technical analysis can identify things unseen on a ticker, it can also aid in our demise.

In the old times, there was little to analyze. Therefore, you could tweak your system to a degree, but not in the way we can continually tweak and refine our trading approach today. Case in point, the settings of the bands. While the configuration is far simpler than many other indicators, it still provides you with double bollinger bands strategy pdf ability to run extensive optimization tests to try and squeeze out the last bit of juice from the stock.

The problem with this approach is after you change the length to My strong advice to you is not to tweak the settings at all. I mean this is why we are all here today right? The information contained in the graphic will help you better understand the more advanced techniques detailed later in this article, double bollinger bands strategy pdf.

Well, the indicator can add that extra bit of firepower to your analysis by assessing the potential strength of these formations. The first bottom of this formation tends to have substantial volume and a sharp price pullback that closes outside of the lower Bollinger Band.

After the rally commences, the price attempts to retest the most recent lows that have been set to challenge the vigor of the buying pressure that came in at that bottom. Many Bollinger Band technicians look for this retest bar to print inside the lower band. This indicates that the downward pressure in the stock has subsided and there is a shift from sellers to buyers.

Below is an example of the double bottom outside of the lower band which generates an automatic rally, double bollinger bands strategy pdf. Also, the candlestick struggled to close outside of the bands. Double Bottom 2 Strategy — Reversals Reversals Another simple, yet effective trading method is fading stocks when they begin printing outside of the bands. For example, instead of shorting a stock as it gaps up through its upper band limit, wait to see how that stock performs.

If the stock gaps up and then closes near its low and is still entirely outside of the bands, this is often a good indicator that the stock will correct double bollinger bands strategy pdf the near-term. You can then take a short position with three target exit areas: 1 upper band, 2 middle band or 3 lower band.

As you can see from the chart, the candlestick looked terrible. Reversal 3 Strategy — Riding the Bands Riding the Bands The single biggest mistake that many Bollinger Band novices make is that they sell the stock when the price touches the upper band or buy when it reaches the lower band. Bollinger himself stated a touch of the upper band or lower band does not constitute a buy or sell signal.

Look at the example below and notice the tightening of the bands right before the breakout. Notice how the volume exploded on the breakout and the price began to trend outside of the bands; these can be hugely profitable setups if you give them room to fly. Band Example I want to touch on the middle band again. Just as a reminder, the middle band is set as a period simple moving average in many charting applications.

The middle line can represent areas of support on pullbacks when the stock is riding the bands. You could even increase your position in the stock when the price pulls back to the middle line. Regarding identifying when the trend is losing steam, failure of the stock to continue to accelerate outside of the bands indicates a weakening in the strength of the stock.

This would be a good time to think about scaling out of a position or getting out entirely. John created an indicator known as the band width.

The idea, using daily charts, is that when the indicator reaches its lowest level in 6 months, you can expect the volatility to increase. This goes back to the tightening of the bands that I mentioned above. This squeezing action of the Bollinger Band indicator foreshadows a big move.

You can use additional signs such as volume expanding, double bollinger bands strategy pdf, or the accumulation distribution indicator turning up. These other indications add more evidence of a potential Bollinger Band squeeze. We double bollinger bands strategy pdf to have an edge when trading a Bollinger Band squeeze because these setups can head-fake the best of us.

It immediately reversed, and all the breakout traders were head faked, double bollinger bands strategy pdf. Wait for some confirmation of the breakout and then go with it. If you are right, it will go much further in your direction, double bollinger bands strategy pdf.

Notice how the price and volume broke when approaching the head fake highs yellow line. Notice how leading up to the morning gap the bands were extremely tight. Tight Bands Now some traders can take the elementary trading approach of shorting the stock on the open with the assumption that the amount of energy developed during the tightness of the bands will carry the stock much lower. Another approach is to wait for confirmation of this belief.

So, the way to handle this sort of setup is to 1 wait for the candlestick to come back inside of the bands and 2 make sure there are a few inside bars that do not break the low of the first bar and 3 short on the break of the low of the first candlestick.

Develop Your Trading 6th Sense No more panic, no more doubts. The below chart depicts this approach. Below is a snapshot of Google from April 26, Notice how GOOG gapped up over the upper band on the open, had a small retracement back inside of the bands, then later exceeded the high of the first candlestick.

These sorts of setups can prove powerful if they end up riding the bands. Essentially you are waiting for the market to bounce off the bands back to the middle line. What I like about this strategy is that you will bat a high winning percentage over time. You are not obsessed with getting in a double bollinger bands strategy pdf and it wildly swinging in your favor. Nor are you looking to be a prophet of sorts and try to predict how far a stock should or should not run.

By not asking for much, you will be able to safely pull money out of the market on a consistent basis and ultimately reduce the wild fluctuations of your account balance, which is common for traders that take big risks, double bollinger bands strategy pdf. Middle of the Bands The key to this strategy is waiting on a test of the mid-line before entering the position.

You can increase your likelihood of placing a winning trade if you go in the direction of the primary trend and there is a sizable amount of volatility. As you can see in the above example, notice how the stock had a sharp run-up, only to pull back to the mid-line. You would want to enter the position after the failed attempt to break to the downside.

You can then sell the position on a test of the upper band. If you have an appetite for risk, you can ride the bands to determine where to exit the position. If I gave you any other indication that I preferred one of the other signals, forget whatever I said earlier.

Most of the money to be made in the market, with minimal risk is in the margins. The same way we say football is a game of inches, trading is the same. First, you need to find a stock that is stuck in a trading range.

The greater the range, the better. Trading Range Now, looking at this chart, I feel a sense of boredom coming over me, double bollinger bands strategy pdf. However, from my experience, the guys that take money out of the market when it presents itself, are the ones sitting with a big pile of cash at the end of the day, double bollinger bands strategy pdf.

In the above example, you just buy when a stock tests the low end of its range and the lower band. Conversely, you sell when the stock tests the high of the range and the upper band. The key to this strategy is a double bollinger bands strategy pdf having a clearly defined trading range. This way you are not trading the bands blindly but are using the bands to gauge when a stock has gone too far.

However, by having the bands, you can validate that a security is in a flat or low volatility phase, double bollinger bands strategy pdf, by reviewing the look and feel of the bands.

A simpler way of saying this is that the bands help validate that the stock is stuck in a range. So, instead of trying to win big, you just play the range and collect all your pennies on each price swing of the stock, double bollinger bands strategy pdf.

What to Do When the Bands Fail?

 

Double Bollinger Bands Strategy To Trade Forex

 

double bollinger bands strategy pdf

 

In this lesson we outline the 3rd rule of the Double Bollinger Bands trading strategy. When the price action has started to settle within the neutral zone, that’s a signal to exit any trades that are riding the current up or down trend, because that trend is now showing weakness. The Double Bollinger Bands Strategy is a versatile trend following volatility based indicator which is fairly reliable by itself. Developed by John Bollinger, the bands are made up of the outer bands which are placed two standard deviations off the 20 period moving average of price. The bands tend to widen when volatility increases and contract during low volatility or periods of consolidation. Mar 31,  · A common Bollinger Band strategy involves a double bottom setup. John himself stated [3], “Bollinger Bands can be used in pattern recognition to define/clarify pure price patterns such as “M” tops and “W” bottoms, momentum shifts, etc.”.. The first bottom of this formation tends to have substantial volume and a sharp price pullback that closes outside of the lower Bollinger Band.