Profitable Bollinger Band Trading Strategies for FX Markets

Bollinger Bands Analysis in Forex. The Bollinger Band is best described as an on-chart volatility indicator. It consists of upper and lower bands which react to changes in volatility.

There are a few signals that can be generated using the Bollinger Band. I would sell every time the price hit the top bands and buy when it hit the lower band. February 10, at 8: 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.

Reversal Patterns with Bollinger Bands Indicator

Bollinger Bands Analysis in Forex. The Bollinger Band is best described as an on-chart volatility indicator. It consists of upper and lower bands which react to changes in volatility.

First, a trader must understand how Bollinger Bands are set up. There is an upper and lower band, each set at a distance of two standard deviations from the security's day simple moving average. Therefore, the Bands show the volatility of the price in relation to the average, and traders can expect movements in price anywhere between the two bands.

Forex traders can use the bands to place sell orders at the upper band limit and buy orders at the lower band limit. This strategy works well with currencies that follow a range pattern, but it can be costly to a trader if a breakout occurs.

Since Bollinger Bands measure deviation from the average, they react and change shape when price fluctuations increase or decrease. Increased volatility is nearly always a sign that new normals will be set, and traders can capitalize using Bollinger Bands.

When the Bollinger Bands converge on the moving average, indicating lower price volatility, it is known as " the Squeeze. News that the Bank of Japan would be increasing its stimulus bond buying policy sparked the trend change.

Even if a trader did not hear about this news, the trend change could be spotted with the Bollinger Band Squeeze. Sometimes reactions are not as intense, and traders can miss profits by setting orders directly on the upper and lower Bollinger Bands.

Therefore, it is wise to determine entry and exit points near these lines to avoid disappointment. Another Forex trading strategy to work around this is to add a second set of Bollinger Bands placed only one standard deviation from the moving average, creating upper and lower channels. Then, buy orders are placed within the lower zone and sell orders in the upper zone, increasing execution probability.

In theory, these are all profitable trades, but traders must develop and follow the methods exactly in order for them to pan out.

Setting Limits First, a trader must understand how Bollinger Bands are set up. Reading Volatility Since Bollinger Bands measure deviation from the average, they react and change shape when price fluctuations increase or decrease. Backup Plans Sometimes reactions are not as intense, and traders can miss profits by setting orders directly on the upper and lower Bollinger Bands.

Keen to give it a go. Just a question, I noticed on 2 of your long trade setup examples that either candle 1 or candle 2 were closed above BB1, but you mentioned that we have a setup if these are both closed below BB1. How critical is this? Thanks in advance for your reply, and also thanks a million times for the unselfish efforts of Chris and yourself in helping us become profitable traders.

Are you sure that candles 1 and 2 are closed above BB1 upper band? Please check one more time. Also here is more explanations: Thank you for sharing another strategy.

Is it really profitable? Could you please share its characteristics especially profit factor, possibly loss rate stop loss hit at its initial place based on your experience? I will do it as my time allows, and will share my results here. I have not calculated the profit factor, but it has worked for me for years. I would be really interested in even a rough indication of how profitable this system has been for you.

It would boost my confidence a lot if i knew that someone has used this for years with decent profit. I bet when you and Chris discussed whether or not to share this strategy then Chris probably warned you about all the feedback you would get about this….. It took me 15 minutes just to read this post. You guys are the best…….. Happy to said it worked.. It hit 2 x SL target long position.. Next I will try in bigger time frame..

Many thanks to you for your simple technic.. We just reported that trade setup as an example. It is too late to enter now: I will try find more setups in bigger time frame.. Really easy and interesting system.

Keeping it simple stupid. I really am interested in following the system. However, I have questions: Following the system, how can we afford consolidations and little trend pull backs? Must candlesticks 1 and 2 form and close under the BB1 or only close under it Long Setup? Can you please give us an approximate win rate of this strategy? Thanks a million times. Most of the people these type of secrets are sodding very high price.

But you are generously helping to willing people. Kamel I need to test this in demo really enjoy all your articles thanks again mate. Sorry I slow to respond taking a holiday best John.

Firstly I am new to and and have recently came across your page in the last few days. I wish to thank both of you for sharing with all of us I will be putting this system to work today and will continue to read your articles which I find extremely interesting and simple thank you again guys I hope some day I can be a successful trader.

We have been using this system for 15 years. Almost all professional trader know about this system. It is neither invented by us, nor any other known person. I got a doubt on candlestick chart. I found that different brokers provide different trading hours thus it would affect the form of candlestick. Hi Kemal , I really love this BB system, its great, but there are just not enough setups in week over 19 pairs for me to trade it full time..

But what you guys are sharing here is really great, thanks you very much. There are clear rules on forming the trade setups. They are explained above. What you mentioned cannot be known as a trade setup. Then you should check the previous two candlesticks to see whether their close prices are below the BB1 upper band or not.

My question is in a long situation, whether the two prior candlestics the ones below BB1 need to be bullish candles or can they have their close prices lower than the open prices? This DBB strategy is really a wonderful trading system!

Thank you for sharing with us your wealth of knowledge and systems. The trade went against me and hit SL after going up rather than down. It was not a typical short setup, but still a short setup. Please see the above examples and you will see the difference. While I sincerely appreciate your mentoring, even as I strive to comprehend the DBB strategy, presently, I am very confused: Hi Jeng , Michael this cool site and saw your here not Kamel , I was just sitting here catching up on some reading and saw your post.

If I may answer you? The candle on 12th did not close below mean the 20 and was a indecision candle spinning top. The candle on the 15th did. So based on all things, mainly the rules of BB. The candle did not close below the 20 , this is not a sell. Not sure how to give a picture of this anyways.. First of all, this is an important article: There is never a guarantee where the price will go, even with a perfect trade setup.

No trader in the world can predict prices. There are probabilities only. Secondly, there are ways to increase your success rate with the DBB strategy: By picking only the optimal setups, you filter out a lot of bad trades and some good ones as well, but overall, profitability should increase.

Also candle 3 closes almost below the lower BB2 which is also not optimal, but still acceptable these extra rules are explained in the second article i linked. I have just begun to use them myself. Hi Jeng , I meant to type , This is Michael not Kamel ,and was just reading some posts , not sure what happened there in begging of my comment , but the rest of post is straight.. If yes, how exactly do we trade it on Weekly and Monthly? Thank you for your response. What I actually mean to ask is following the rules on weekly and monthly would require huge stop loss setting and was thinking there could be a way to trade it on daily.

So is best to leave it if cannot be traded according to rules? Of course, trading the shorter time frames also increase the risk. Any trading system generates some losses sometimes and cannot be profitable all the time. Also any trading system misses good and strong movements sometimes. Please read my most recent article about this system: I noticed that in some daily chart examples there are five bbs and four in others, is this due to zooming while captured?

I noticed in the going short chart examples a cpl had candles one and two closed a little above bb1? The only reason I could think of would be they formed strong patterns like in the bb break out system. I have backtested your strategy, here are my remarks: Good that you backtested it. How much did you risk per trade to get to these results? How is it going with your modified DBB? Hi I am a novice starter and still loosing money: Breakeven is the entry price.

You can move the stop loss to breakeven when your position is in profit. If so, your position will be closed with no loss if the price goes against you. Do i understand correctly, you wait until the daily candle closes and at that moment you make a decision? Or is it possible to look at the candles on a different time during the day and act then?

You can use this method on any time frame, but daily and longer time frames return better results because they are stronger. Dear Chris, This is a good news for me too as I have to wake up 3. Close the second position when candlesticks start crossing the BB1 and BB2 upper bands, or when one of the candlesticks breaks below the Bollinger Middle Band. The second sentence says the opposite? Maybe that paragraph and the corresponding one about shorts could be clarified a little.

Does this rule still apply if this happens between SL and the profit target of the first position? Do i follow the rule i quoted, or do i leave the position open until break even is hit or until it goes above the old 2xSL profit target? That part is fixed. So now it is: Close the second position when candlesticks start crossing the BB1 upper bands, or when one of the candlesticks breaks below the Bollinger Middle Band….

Please look at the below chart and let me know if it is possible to have the scenario you mentioned here on this chart or not: During my daily round i noticed that i may have been doing something wrong since i started with the DBB strategy less than a week ago. I was moving the SL of both positions to break even when the price moved 1xSL in my favor.

But now that i read the article again see the quoted text below , i see that i should only move the SL of the first position and that i should not move the SL of the second position until the first position hits TP.

Or does it not matter? When the first position hits the TP, you move the SL of the second position to breakeven. If the first position is 1: The way i interpret the above quoted text is that if the price is at 1. So at that point you have two different stoplosses, is that correct? You move the second position SL when the first position hits the TP. In that example, my target would be pips. What i wanted to know was when to move the second position to breakeven.

Again, sorry to take up your valuable time, i realize you must be very busy between writing all these wonderful articles and answering questions from other people. Sorry for my confusion. The above article is written by Kamel and that is his strategy. Just read it multiple times and watch examples from authors.

I have simplified this strategy to maximal extent and even increased the profitability and proved it in backtest. So if the original strategy is too complicated to you, you can use the rules i have posted above. I think that can tell us more about its success rate. It is impossible to answer this question, because markets behave differently every month.

Please read the below comments. Some trader have back-tested this system and published the results on this page. Thanks for your article i have read all the article and it is very good for daily time frame trading… can you tell me how to download Double bolinger Band….

You should add two Bollinger Bands to the same chart. I am desperate that you did not answer my question on Mar 5, on this same thread..!! Example for a downtrend: Please upload an example to tinypic. The typically DBB setup: Thank you for sharing this. It has to be back-tested to see how it has worked in the past. Hello Chris I am appreciate to find this site as I am novice in trading and thank you and your friends for such huge support, almost read all 5 steps and trying follow your points.

I am at stage of analyzing and practicing, so I have question: May I know what did I miss? Thank you for your attantion. Sometimes even the best and strongest setups hit the stop loss. You have to be prepared for it. Have you ever check what is the winning rate for this strategy?

It looks so simple to follow and yet effective. Thank you for sharing a system so effective and simple with all of us and for free. I just stumbled across your free system online, since I just completed a very similar daily system myself and looked for ideas to finally make it work. I created one with a quite similar idea to catch trends in the beginning. Since I did not know a better way, I based mine on moving averages and candlesticks but I find your approach with two sets of Bollinger bands a whole lot more comfortable and precise than MAs alone could be.

So your way to keep things simple is just incredible to me. I plan to apply that system as soon as possible. First I need to refund my account, because I let mine be torn down by a lot of mistakes Chris identified in his article about greed.

So I hope to do better in the future. You and Chris are incredible, unselfishly educating people with true wisdom and encouragement. My ultimate goal is to be able one day to give wisdom for other people to prosper just the way you guys do.

I am truly greatful and will keep reading your stuff and learn and master everything you share. This trading system is simple and effective. Just started back-testing it and collecting the information on other articles and your comments. I am somewhat new to technical analysis in general, so I was thinking of trying this system alone because it is simpler and seeing if I can handle it alone, without using the main system.

Chris what happened to Kamel??? Many days have passed since I last saw Kamel articles last in this site. I hope to get something new from Kamel.

Hmm I agree perfectly with u on this point of view. Kamel, show Chris that you are not lazy so that we can see something new articles from u. Only the 3 candlestick have to be bullish in case of long trade setup. Are you saying that trading with the stochastic system that you taught us and use it on weekly timeframe, we can be consistently profitable? It is explained above. You add 2 Bollinger Bands to each chart. One with default settings.

The other one with Dev 1. Charith, You can add 2 bollinger bands with deviations 1 and 2. If you save this as a template then you can use it again and again easily. This will be easy for you. Indicators links are at the end of the post. I hope those who LuckScout users who developed the indicators make them compatible with the new MT4 build.

Make sure to read this article: Yes, I see a short trade setup based on DBB around that area. Of course there is no Please mark the trade setup somehow so I can see what setup mean exactly. Do you have a special explanation for not trading this set-up or was it okay to take the positions?

I see only half of the circle. By the way, the It is explain in the article that you should add two sets of Bollinger Bands indicator.

One with the default settings and the second one with Deviations: Open your mt4 account or platform and go to the insert button click it select bollinger bands a box should pop up click the parameters it should be 20, 2, Repeat this process and add change the deviation to 1 you should have two sets. If yes, please share that as well. Surely it is always defeating my understanding!

Thank you kamel, been using your strategy for a while now and love it, so simple yet very effective!! I think I have to start using this strategy combine with master Chris strategy and see what result it will give. I love your article so comprehensive. Hi Chris and Kamel and everyone one who works in this site. I am new to your site and just registered few days ago. I have been reading your articles about DBB strategy and I found it so amazing.

I looked at so many patterns specially in EURUSD and I kind of feel the pattern of the candle stick or maybe the length of them or the distance they have from the BB1 upper or lower band can make a difference. Thanks a lot for your help and support and your amazing information. I just want to say thankyou for posting this article because It will help me start making profitable trades. Up until now In have only made small profits and mostly losses trying to trade the shorter time frames.

Thanks again and keep posting. Could this be due to algorithmic trading killing market inefficiencies? As I explained once, you can use BB1 and locate the strong candlestick signals. There are so many traders who do it. Algorithmic trading cannot affect market. Please kindly share a screenshot as an example, so that I can see what you are talking about exactly. My broker is CM UK. Could you give me advice on this? Pardon for the many questions, I just registered an account and bursting with questions Thanks a lot again!

Yes, the daily candlestick close time can make the candlesticks shapes different. In most of my screenshots I use the FxPro charts. You can do the same for your analysis, and then use your broker platform only to take the positions.

Thank you sir for this new strategy of trading. I would like to know how to add second set of BB to my screen. I tried but could not succed. Thank you so much sir Kamel, you have solved me alot of headache especially in determining the target and stop loss. How to use this strategy in Amibroker software? Can the DBB strategy be profitable using 4 hour charts?

Or is it better to stick to Daily and longer time frames with this strategy? The longer the time frame, the stronger the signals. Shorter time frames will have more losing positions. I would like to know when you mentioned you check only 15 minutes a day to check for a setup, does that mean you are only looking for 1st candlestick and 2nd candlestick close below Upper BB1 and 3rd candlestick close above Upper BB1 setup only?

I hope you understand my question. We should check the last 3 closed candlesticks. Please also read this article: The 3rd candle was 2 days ago, but i think the price still ok to take position. I just want u guys too take a look the chart and confirm for thia signal, cause im new for this DBB system.

Hello Anton Praja I have opened position on this currency pair on I am still still holding the position. I have 2 doubts to clarify 1. Does the color of the candle candle no. Is this strategy valid if candle 2 and 3 touches BB1 bottom line and BB2 bottom line. That method seems interesting, I will give it a try. Sorry if there has been already an answer, but is the strategy suitable with CFD and metals charts?

And if no, why? Dear Chris,So thankful for your hard work you have done so far to improve our trading skills. Special thanks to Kamel for this simple and effective DBB strategy. Thank you for back test Report of this strategy by JojoW. HI Kamel Another confusion. After 14th March, there was a selling signals but after Candle stick 3, which was closed down BB1 lower band, prices startd going up all of a sudden. Hi Kamel and Chris. Found the LuckScout website only yesterday and am in the process of reading through your articles.

How do I set up the alerts indicator? Do you always set a market order when an eligible candle closes, or is a pending order an equally plausible entry?

If so, would a pending order have to be cancelled if not triggered within one bar? So you will have to give more time to the market to hit the order. Did you test this, or is it more a style-of-trading thing? Thanks, and happy trading. Thank you Kemal for the article.

Although I have read before, still this is invaluable article to remind me. I like that you guys are simple and realistic. I look forward to many more great articles. This eBook shows you the shortest way to acheive Financial Freedom: Just before you go, did you check This System? Make sure to do it now, otherwise you will regret. Article by LuckScout Team.

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