Bollinger Bands As Model T Second Indicator

Bollinger Bands

Most people use the Bollinger Bands as their one and only indicator.

Of course there are virtually Millions of ways to do that. But just out of the blue, take a look how cool the simplest “Bollinger Band System” could be:

  1. Choose ANY time frame. Fractal geometry really works!
  2. Take the first trade when price touches one of the 2 external bands, in the “inwards” direction (i.e., if price touches the “lower”, you buy… the “upper”, you sell);
  3. When price touches the middle-band, close half of you position;
  4. If price continues in your direction, close everything when it touches the opposite external-band.
  5. If price comes back, close at break-even.
  6. You may keep inverting this over and over again.
  7. And yes, DON’T forget – EVER – the Stop Loss. I set it in tandem with a 14 period ATR. But the real proportion is totally up to each individual trader, of course, and his/her risk exposure policy!

The theory – but NOT only the theory – is that more than 80% of the time prices are range-bound. So, you’ll probably be “right” more times than “wrong”… hehehe…

And this is a very good thing for your ego! We, on the other hand, trade on the remaining 20% “trend-bound” (!), which is sometimes very depressing… to say the least! :(… 😉

Anyway, people, don’t take me “word-by-word”, please… and ALWAYS remember I’m NOT here to TEACH anybody! I’m not even qualified for that. So, whatever you take from this blog is your responsibility to test it yourself, tweak with parameters, and do whatever it takes to “MAKE IT YOURS”! Fair enough?

And of course there are, as I said, MILLIONS of ways to trade anything, including the Bollinger Bands. They can even become a wonderful “trend-bound” (!) system, if you ride them from the OUTSIDE till they become weak and price brakes into the “inside”. And so on and on…


Can We Make A Robot Out Of It?

Sure we can! And that’s why I included it in my “bag of indicators”. Trading the Bollinger Bands can become mechanical, therefore produce a robot.

Which parameters? I like the 20 periods at 2 standard deviation’s level.

Why? To REALLY tell you the truth, I don’t know for certain. I like those parameters just because I figured out that they are the most broadly used combination, on ALL time-frames, worldwide. And that seems to be enough for me!

Cool? Great!…

Thanks for watching…


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