Do Bollinger Bands Work?

There is a lot of question asking whether the Bollinger bands work at all for a trader. From my experience using it, the answer is YES and therefore in this article, I will be sharing with you how I use the bands to trade. Those traders who have problems with using the bands are usually trading using it alone. In fact, there is no way you can trade with a single indicator. You must always trade with several indicators and then place your trade when most of them are showing a confluence of signs.

The Bollinger bands work best when it is used together with an oscillator like the stochastic of RSI. The upper and lower bands demonstrate the range that the currency is ranging and there are a few ways you can trade using this range.

1) Reversal Trading: When the currency hits one of the bands, you should immediately check the oscillator to see if it is oversold or overbought. If the price hits the upper band and the oscillator is showing overbought, this is a good SELL signal and if the price hits the lower band with the oscillator showing oversold, it is a BUY signal.

2) Breakout Trading: If the Bollinger bands are moving in a narrow range, it is a sign of consolidation and you should be waiting for the sudden movement of the price to enter a trade. This is how you can make use of the bands to trade breakout.

The Bollinger bands is definitely a good indicator to have and you must learn how to make use of it to improve your trading strategies.

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Do Bollinger Bands Work?

There is a lot of question asking whether the Bollinger bands work at all for a trader. From my experience using it, the answer is YES and therefore in this article, I will be sharing with you how I use the bands to trade. Those traders who have problems with using the bands are usually trading using it alone. In fact, there is no way you can trade with a single indicator. You must always trade with several indicators and then place your trade when most of them are showing a confluence of signs.

The Bollinger bands work best when it is used together with an oscillator like the stochastic of RSI. The upper and lower bands demonstrate the range that the currency is ranging and there are a few ways you can trade using this range.

1) Reversal Trading: When the currency hits one of the bands, you should immediately check the oscillator to see if it is oversold or overbought. If the price hits the upper band and the oscillator is showing overbought, this is a good SELL signal and if the price hits the lower band with the oscillator showing oversold, it is a BUY signal.

2) Breakout Trading: If the Bollinger bands are moving in a narrow range, it is a sign of consolidation and you should be waiting for the sudden movement of the price to enter a trade. This is how you can make use of the bands to trade breakout.

The Bollinger bands is definitely a good indicator to have and you must learn how to make use of it to improve your trading strategies.

Read more...

Forex Beginners - Using Bollinger Bands in a Trending Strategy That Absolutely Works

One of the best forex indicators is Bollinger Bands. They are very simple to use, they are free, and they are extremely reliable. At just a glance, you can tell if the market is trending or stuck in a range. You can tell if the market has hit extreme prices or if it is about to explode.

So I want to show you a simple trading strategy that relies heavily on Bollinger bands. And, oh yeah, it makes pretty good money!

Identifying a trending market with Bollinger bands is very simple. If the market is trending up, price will walk up the upper band. If the market is trending down, price will walk down the lower band.

Bollinger bands plot a moving average in the middle, and the extreme bands are formed by standard deviation lines around that moving average. Now don't be scared by the algebraic term standard deviations. You don't have to know how to calculate them - the indicator does that by itself.

Normally, the standard deviation for Bollinger bands is set at 2. For this strategy, you want to change it to 1. Just go into the settings of the Bollinger indicator and change the number 2 to 1. This will help you identify trading opportunities better.

Now that you have changed the standard deviation, you will notice that the extreme bands are now closer to the moving average. This is exactly what you want.

Now look for any candle that closes outside the bands. When you see this, enter a trade in the direction of the closing candle. Your stop loss will go on the other side of the candle.

So, in an uptrend, you will place your stop below the candle that closed above the upper band. In a downtrend, you will place your stop above the candle that closed below the lower band.

Your take profit should be twice as much as your stop loss. For example, if your stop loss is 25 pips, then your take profit would be 50 pips.

Pretty simple, right? Not hard at all, and that is the way most profitable trading strategies are - simple.

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