Bollinger Bands v2.0: Expert trading
If you have already mastered Bollinger Bands indicator and looking for more advanced level of usage, we have prepared that article specially for you.
We will show you three different strategies for Bollinger Bands indicator which are used by professional traders.
You can use Bollinger Bands not only when the graph “touches” upper or lower lines and bounces between the two. You can also “ride” the trend with that indicator.
How do you do that: analyse the graph and look for the tightening of Bollinger Bands. If the channel has been tight for quite some time and then you see the break out, look if the indicator starts widening. If you see a sudden widening after a long tight period prepare to “ride” the trend. That strategy better works on 20-period Bollinger Bands with the deviation of 2.0. Depending on the volatility it is better to use with longer trades from 15 minutes.
That strategy gives you an opportunity to profit on small price movements.
How do you do that: look when quotes “touch” the middle line first. Then confirm the trend before entering a deal. As in the example below, trend had a strong rising movement before it “touched” the middle line. Wait for the next candle to close in green and then enter a Call deal. That strategy better suits Short term deals as movements are quite fast. We recommend you to first test that strategy on the Demo platform before moving to Real trading.
That strategy is quite interesting due to the fact that you’ll be using two Bollinger Bands indicators.
1st Bollinger Bands: Period 20, Deviation 2
2nd Bollinger Bands: Period 20, Deviation 1
Notice, that you set similar Period value and different Deviations. It means that in your analysis you’ll be using only upper and lower lines of two indicators.
What you get after you set both indicators:
When to open a Call deal: wait for the candle to close above the 1st Bollinger Bands upper line. And previous two candles should be closed below the upper line of the 1st Bollinger Bands.
When to open a Put deal: wait for the candle to close below the 1st Bollinger Bands lower line. Then check for two previous candles as well. If those two closed above the 1st Bollinger Bands you have a signal to open a Put deal.
Even with the basic indicator like Bollinger Bands you can analyse and predict the market effectively. Study new strategies, check those on the Demo platform and then move to the real platform. Trade smart with Ayrex.