- The Bollinger Bands Forex Strategy Guide | Admiral Markets - Admirals
- Bollinger Bands ® – Top 6 Trading Strategies
- How to use Bollinger Bands
The DBB can be applied to technical analysis for any actively traded asset traded on big liquid markets such as Forex, stocks, commodities, equities, bonds, etc.
The Bollinger Bands Forex Strategy Guide | Admiral Markets - Admirals
Date Range: 24 June - 28 July Captured 28 July Disclaimer: Charts for financial instruments in this article are for illustrative purposes and do not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admiral Markets CFDs, ETFs, Shares. Past performance is not necessarily an indication of future performance. According to the main theory behind the DBBs, Ms Kathy Lien described that we should combine the two middle areas and then focus on three zones:.
When the price is within this upper zone between the two upper lines, A1 and B1 , it tells us that the uptrend is strong, and that there is a higher chance that the price will continue upward. As long as the price candles continue to close in the topmost zone, the odds favour maintaining current long positions or even opening new ones. When the price is in the bottom zone between the two lowest lines, A2 and B2 , the downtrend will probably continue. That tells us that as long as the candles close in the lowest zone, a trader should maintain current short positions or open new ones.
When the price gets within the area defined by the one standard deviation bands B1 and B2 , there is no strong trend, and the price is likely to fluctuate within a trading range, because momentum is no longer strong enough for traders to continue the trend. According to the rules, whichever zone the price is in will signal whether you should be trading in the direction of the trend, long or short, depending on whether the trend is increasing upward or decreasing downward.
Basically, if the price is in the upper zone, you go long, if it's in the lower zone, you go short. If the price is in the two middle quarters the neutral zone , you should restrain from trading if you are a pure trend trader , or trade shorter-term trends within the prevailing trading range.
Usually, traders trade higher time frames such as H4 or operate on a daily basis with this strategy. Our next Bollinger bands Forex trading strategy is for scalping. Five indicators are applied to the chart, which are listed below:. The time frame for trading this Forex scalping strategy can be either 1 minute, 5 minutes, or 15 minutes. Targets are Admiral Pivot points, which are set on a H1 time frame.
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A stop loss is placed below the interim Admiral pivot support for long trades or above the interim Admiral Pivot resistance for short trades. This Bollinger Band scalping system should ideally be traded with major Forex currency pairs. Below we have applied the above indicators to charts on a 5 minute time frame. Date Shown: 16 September Captured: 16 September In the chart above, there are two such opportunities highlighted by the red vertical lines. For sell positions, you are looking for the opposite conditions of buy trades.
Bollinger Bands ® – Top 6 Trading Strategies
The 4 EMA needs to be crossing below the middle Bollinger band, at the same time as the Awesome Oscillator is crossing below the zero line and the RSI is crossing below the 50 line. In the chart above, there are two sell indicators marked by the red vertical lines. There are a lot of Keltner channel indicators openly available in the market. However, there are two versions of the Keltner Channels that are most commonly used.
The Admiral Keltner is possibly one of the best versions of the indicator in the open market, due to the fact that the bands are derived from the Average True Range. You should not only be sure that you're using the formulation that uses the Average True Range, but also that the centre line is the period exponential moving average. The Admiral Markets Keltner indicator has all the settings correctly coded in the indicator itself, and, for this strategy, it should look like this:.
With the Bollinger bands, standard deviation is determined by how far the current closing price deviates from the mean closing price. The general concept is that the farther the closing price is from the average closing price, the more volatile a market is deemed to be, and vice versa. Date Range: 22 June - 20 July Captured: 28 July In the chart above, at point 1, the blue arrow is indicating a squeeze.
At point 2, the blue arrow is indicating another squeeze. What's difficult about this situation is that we still don't know if this squeeze is a valid breakout. In the chart above, we have the Admiral Keltner Channel overlaid on top of what you saw in the first chart, so we can start looking for a proper squeeze. Data Range: 17 July - 24 July Using these two indicators together will provide more strength, compared with using a single indicator.
Date Range: 28 August - 3 September It is important to note that there is not always an entry signal after the release. This occurs when there is no breakout candle that could trigger the trade. The recommended time-frames for this Bollinger bands trading strategy are MD1 charts. This strategy can be applied to any instrument. Intraday breakout trading is mostly performed on M30 and H1 charts. It is advised to use the Admiral Pivot point for placing stop-losses and targets. Target levels are calculated with the Admiral Pivot indicator.
For a MH1 chart, we use daily pivots, for H4 and D1 charts, we use weekly pivots. Both settings can be changed easily within the indicator itself. Date Range: 10 September - 16 September If you would like a more in-depth overview of Bollinger Bands, and how you can use them to trade the live Forex markets, check out a recent webinar we ran on trading markets with Bollinger Bands, which features a guide to the Wallachie Bands trading method.
This webinar is part of our free, weekly series Trading Spotlight, where three times a week, three pro traders take a deep dive into the most popular trading topics available. Register for FREE by clicking the banner below! Date Range: 19 August - 28 July This is a long-term trend-following trading strategy and the rules are simple:.
See how we get a sell signal in July followed by a prolonged downtrend? Most recently there is also a buy signal in June , followed by an upward trend which persists until the date the chart was captured.
Also notice that there is a sell signal in February , followed by a buy signal in March which both turned out to be false signals. Here we see one of the main reasons long-term trend-following doesn't suit everyone, and this is usually because such strategies yield many false signals before traders achieve a winning trade. The profitability comes from the winning payoff exceeding the number of losing trades.
Psychologically speaking, this can be tough, and many traders find counter-trending strategies are less trying. Fortunately, counter-trenders can also make use of the Bollinger bands Forex indicator, particularly if they are looking at shorter time-frames. Some traders assume that when the bands are over-expanded, the current market trend may be close to a consolidation period or a trend reversal.
Alternatively, when the bands get too tight, traders tend to assume that the market is getting ready to make an explosive movement. Typically, the Keltner Channels tend to be tighter than Bollinger Bands. Also, the KC usually provides overbought and oversold signals earlier than BB would.
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On the other hand, the Bollinger Bands tend to represent market volatility better since the expansion and contraction movements are much wider and explicit when compared to KC. Moreover, by using standard deviations, the BB indicator is less likely to provide fake signals, since its width is larger and, thus, harder to be exceeded. Between the two, the BB indicator is the most popular. But both tools can be useful in their own way - especially for short-term trading setups.
Other than that, the two may also be used together as a way to provide more reliable signals. Trust Wallet.
How to use Bollinger Bands
Ask Academy. Bollinger Bands Explained. Table of Contents. What are the Bollinger Bands? Trading Technical Analysis Economics. Home Articles Bollinger Bands Explained. They are broadly used as an instrument for technical analysis TA. Basically, the Bollinger Bands work as an oscillator measurer.
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