How to use Bollinger Bands
We want to give you some insight into the Bollinger bands trading strategy, which is one of the best options for 4-hour chart trading strategies.
Here are the criteria to enter a trade:
-Look for a pierce of the top or bottom of the Bollinger Band
-Wait for a strong bar going the opposite direction of the pierce
-Make your entry when the bar exceeds the previous high or low (depending on what direction you’re going)
-Set your stop-loss below or above the previously closed candle
-Set your limit at the 20 Point MA or just drag your stop behind it until you’re taken out
Since I have adopted it, it has allowed my account to increase by a few percent each day which adds up VERY quickly. The strategy is all based on Bollinger bands.
A Bollinger band is a forex indicator that is designed to show when a pair is overbought over-sold. In short, when a pair is too high or too low, you wait for a signal going the other way. The best way to describe it is to show you. Below is a trade that I made in the past based on the Bollinger Bands Strategy.
As you can see, I took the long because the tails from previous candles pierced the bottom of the Bollinger band showing that the price was over-extended and was ready to turn. After getting two bullish bars the other way, I was confident the reversal had started. I put a box around to other times that the Bollinger band was pierced and move up, and you can see how big the moves are.
The awesome thing about this strategy is that it works on any time frame. On the trade below this trade went for 500 pips. I will warn you that the smaller the time frame, the less likely the Bollinger band strategy is effective. It is a PERFECT day and 4hr strategy.
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