Here's how the Bollinger Bands work:
- When the Bollinger Band is going up, only find opportunities to buy;
- When the Bollinger Band is facing downwards, only look for an opportunity to enter a sell order;
- Relying on the middle Bollinger Band, not the outer 2.
If you are using the MetaTrader 4 platform, set up a Bollinger Band indicator when trading with this strategy as follows:
Trading strategy with middle Bollinger Band - Buying condition
Below are the conditions for you to enter a buy order in an uptrend:
- In the upward trend, the Bollinger Bands will also be directed upwards;
- You will wait until the price falls and hits the middle Bollinger Band;
- Place a buy order now or wait until the candlestick touches the middle Bollinger Band line and then place a buy order.
Trading strategy with middle Bollinger Band - Selling condition
Brothers based on the following conditions to place a sell order:
- Bollinger Band must face down;
- Wait for the price to rebound and touch the middle Bollinger Band;
- Sell at the touch of the Bollinger Band or sell at the close.
Trading strategy with middle Bollinger Band - How to place a stop loss
Here's how to place a stop loss when you place a buy pending order:
- If you place a pending order to buy when the price hits the middle Bollinger Band, the best stop loss should be at the lower Bollinger Band; and at the close of the candle if the distance is too far move the stop loss at least 5-15 pips below the bottom of the next opening candle;
- Or if you place a buy order right after the price hits the mid-BB, place a stop loss of at least 5-10 pips below the bottom of the opening candle.
Similarly, how to place stop loss when placing pending orders:
- Place the stop loss at the same level as the upper BB;
- Or place a stop loss of 5-15 pips on the top of the opening candle.
Trading strategy with the middle Bollinger Band - How to take profits
Here are a few ways for you to take profit when trading with the BB in the middle:
- If it's a buy trade, take profit as soon as the candle hits the upper BB;
- If it's a short trade, take profit as soon as the candle hits the lower BB;
- Or you can trail a profitable short by moving the stop loss after the top of each candlestick until the order exits;
- Similarly, you can trail stop trade by moving the stop loss behind the bottom of each candlestick until the order exits.
Trading strategy with middle Bollinger Band - Summary
This is an extremely simple strategy, suitable for new Trader brothers to the market. Summarize some advantages and notes when you trade with Bollinger Band below:
- If you are a Scalp Trader and prefer to trade on shorter timeframes, you can use this strategy to trade on 1 minute to 5-minute frames;
- This is also a good Swing trading strategy on 4H timeframes to daily chart;
- You avoid trading when the ribbon narrows because there can be many false signals;
- You can use a reversal candlestick pattern to confirm your entry signal;
- Like any other strategy, Trader can lose, can win when trading with the middle Bollinger Band.
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