Bollinger Bands Breakout with Elliott Waves.
The most comprehensive guide for how to trade with bollinger bands. Learn cutting edge bollinger bands strategies for bitcoin, futures and mypictgallery.tk guide has videos, real-life trading examples and custom visuals to demystify and answer all of your questions related to the indicator. Bollinger Bands is a techinacal analysis tool invented by john Bollinger in the s. Having evolved from the concept of trading bands, Bollinger Bands can be used to measure the highness or lowness of the price relative to previous trades.
In addition, the candlestick struggled to close outside of the bands. Another simple, yet effective trading method is fading stocks when they begin printing outside of the bands. Now, let's take that one step further and apply a little candlestick analysis to this strategy. 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 on the near-term. You can then take a short position with three target exit areas: As you can see from the chart, the candlestick looked terrible. 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. 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. 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. Another trading strategy is to gauge the initiation of an upcoming squeeze.
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, or the accumulation distribution indicator turning up.
We need 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. You don't have to squeeze every penny out of a trade. Wait for some confirmation of the breakout and then go with it. If you are right, it will go much further in your direction. Notice how the price and volume broke when approaching the head fake highs yellow line.
To the point of waiting for confirmation, let's look at how to use the power of a Bollinger Band squeeze to our advantage. Notice how leading up to the morning gap the bands were extremely tight.
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.
Based on reading these three requirements you can imagine this does not happen very often in the market, but when it does, it's something else. The below chart depicts this approach.
Now let's look at the same sort of setup but on the long side. 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. This strategy is for those of us that like to ask for very little from the markets.
Essentially you are waiting for the market to bounce off the bands back to the middle line. You are not obsessed with getting in a position 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.
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. This is honestly my favorite of the strategies. If I gave you any other indication that I preferred one of the other signals, forget whatever I said earlier.
First, you need to find a stock that is stuck in a trading range. The greater the range, the better. Now, looking at this chart, I feel a sense of boredom coming over me. 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.
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 stock 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. You could argue that you don't need the bands to execute this strategy. However, by having the bands, you can validate that a security is in a flat or low volatility phase, by reviewing the look and feel of the bands.
So, instead of trying to win big, you just play the range and collect all your pennies on each price swing of the stock. Like anything else in the market, there are no guarantees. Bollinger Bands can be a great tool for identifying volatility in a security, but it can also prove to be a nightmare when it comes to newbie traders.
Don't skip ahead, but I will touch on this from my personal experience a little later in this article. Not exiting your trade can almost prove disastrous as three of the aforementioned strategies are trying to capture the benefits of a volatility spike. For example, imagine you are short a stock that reverses back to the highs and begins riding the bands. What would you do? While bands do a great job of encapsulating price movement, it only takes one extremely volatile stock to show you the bands are nothing more than man's failed attempt to control the uncontrollable.
While there is still more content for you to consume, please remember one thing - you must have stopped in place! Let me help you out if you are confused - kill the trade! While bandsdo a great job of encapsulating price movement, it only takes one extremely volatile stock to show you the bands are nothing more than man's failed attempt to control the uncontrollable. Strategy 5 - Snap back to mthe iddle band, will work in very strong markets.
I have been a breakout trader for years and let me tell you that most breakouts fail. Not to say pullbacks are without their own issues, but you at least minimize your risk by not buying at the top. Shifting gears to strategy 6 - Trade Inside the Bands, this approach will work well in sideways markets. Because you are not asking much from the market in terms of price movement. In the long run, the strategy is often correct, but most traders will not be able to withstand the declines that can occur before the correction.
The selling pressure was clearly in oversold territory. The strategy called for a buy on the stock the next trading day. Like the previous examples, the next trading day was a down day; this one was a bit unusual in that the selling pressure caused the stock to go down heavily.
The selling continued well past the day the stock was purchased and the stock continued to close below the lower band for the next four trading days. Finally, on March 5, the selling pressure was over and the stock turned around and headed back toward the middle band. Unfortunately, by this time the damage was done. The strategy calls for buying Apple shares on December The next day, the stock made a move to the downside. This is case where the selling continued in the face of clear oversold territory.
During the selloff there was no way to know when it would end. There are times, however, when the strategy is correct, but the selling pressure continues.
During these conditions, there is no way of knowing when the selling pressure will end. Therefore, a protection needs to be in place once the decision to buy has been made. The strategy correctly got us into that trade. Both Apple and IBM were different because they did not break the lower band and rebound.
Instead, they succumbed to further selling pressure and rode the lower band down. This can often be very costly. In the end, both Apple and IBM did turn around and this proved that the strategy is correct.
The best strategy to protect us from a trade that will continue to ride the band lower is to use stop-loss orders. Seems work well with TIme frame 1 h. Despair 1 year ago. Meander Bands by Thomas Stridsman bollinger bollinger bands meander bands. Francesco78 1 year ago. I try to be crearer. JanWd Hi Francesco, nice algorithme, works with me on other markets as well!
Francesco78 thank you Janwd. Do you mind sharing where it works? Thomas 1 year ago. Bollinger Moz Indicator bands bollinger signals. Realtime82 Hi I was wondering if it would be possible to get an alert by sound when the signals shows BravoDelta juanj wondering if you may help me please.
I am looking for a simply strategy to use on the Doctrading 1 year ago. Doctrading AH ok, I think the ca3 is the same: Pier 1 year ago. Ho caricato il file e mi viene restituito il messaggi CKW Thanks Francesco for sharing. Equity curve in overall looks great and testing it on demo: Francesco78 Hi CKW thanks for your comment and for spending time on the steategies.
The framework is ver Seemore Profit 1 year ago. Dax Bollinger break with volume. Nicolas Thanks for sharing your automated trading strategy idea. Even if you accumulate loosing orde Potential here to build onto this.
Have opened a forum thread for further discussion: Thank you to the Swingforfortune 1 year ago. TTM Squeeze fired screener bollinger keltner squeeze.
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They are most likely part of a bigger degree corrective wave, like a zigzag or a zigzag family pattern. Bitcoin with Bollinger Bands.