Top 5 Winning Bollinger Band Trading Strategies to Try in 2022

What is Bollinger Bands Indicator?

Bollinger Band trading indicator is a common tool used in daily trading.

If you are a fan of this blog, you might as well have used it in your trading.

The indicator is based on statistical standard deviation and is actually simple to understand and use.

The Bollinger Bands indicator forms a shield around the price and helps in price action analysis.

It also has a middle moving average, from which the lower and upper shields project, given standard deviations.

Though you may already have a strategy that you use to trade the Bollinger bands, market conditions may change without notice leading to imminent losses.

For that reason, and for direly wanting to help you grow your account, I will show you five solid strategies that you can use to trade in 2021.

Beginning with: –

1. The ‘Bollinger Bands Breakout with Increased Volume’ Strategy.

This strategy is simple.

It involves trading Bollinger Band breakouts which occur with a specific threshold of volume.

Step 1.

The first step of this strategy is setting up the indicators – Bollinger Bands and the Volume indicator.

The Bollinger Band trading indicator will appear as a shield above and below the price action, with a moving average at the center.

The volume indicator, on the other hand, will appear as a set of bars on a separate window below the main chart.

Step 2.

The second step involves looking for Bollinger Band breakouts.

Bollinger Band breakouts occur when the price protrudes outside the bandwidth of the Bollinger Band indicator.

A bullish Bollinger Band breakout is when the price protrudes upwards above the upper Bollinger Band.

On the flip side, a bearish Bollinger Band breakout occurs when the price protrudes downwards below the lower Bollinger Band.

Step 3.

The third step of this strategy is gauging the volume threshold with which the bullish or bearish Bollinger Band breakout occurred.

The breakout must be accompanied by a volume bar on the volume indicator which is at least 1.2 times the average volume.

That means, the breakout candlestick must be longer than average or longer than the preceding candlesticks by a significant margin.

Step 4.

The fourth step is entering a long or a short position.

If the bullish Bollinger Band breakout was accompanied by a significantly increased volume as specified, enter a buy or long position.

If on the other hand, the bearish Bollinger Band breakout was accompanied by a significantly increased volume as specified, enter a sell or short position.

Step 5.

The fifth step is the exit plan.

Hold the buy position as long as the price remains above the Bollinger Band Moving Average.

On the other hand, hold a sell position as long as the price remains below the Bollinger Band Moving Average.

2. The Gimmee Bar Strategy.

The Gimmee Bar Strategy involves using Bollinger Bands with price action to trade price ranges.

The price ranges during low volatility and therefore, this strategy works best during moments of reduced market volatility.

Step 1.

The first step is setting up the indicator – Bollinger Bands.

It will appear as a shield above and below the price action, with a moving average at the center.

Step 2.

The second step is choosing the market to trade.

The market to trade with this strategy is one that is in low volatility and ranging.

Observe the price to see which markets seem to reverse almost every time the price hits either the upper or the lower Bollinger Band.

You can consider looking for less volatile markets on currency pairs whose trading sessions have closed.

Step 3.

The third step involves establishing a trading range.

Do so by observing price action with the Bollinger Bands indicator.

A trading range occurs where the price touches the upper or lower Bollinger Band but reverses towards the central Moving Average, instead of breaking out of the bandwidth of the indicator.

The price must therefore tag the upper and lower Bollinger bands several times without breaking out to resort to a trading range.

Step 4.

The fourth step of this strategy is identifying the Gimmee bar.

A bullish Gimmee bar occurs when the price, after falling to touch the lower Bollinger Band, forms a bullish candlestick.

A bearish Gimmee bar, on the other hand, occurs when the price, after rising to touch the upper Bollinger Band, forms a bearish candlestick.

Note that you must avoid Gimmee bars that overlap with or are close to the Bollinger Band central Moving Average, have a wide range, or are followed by a trading gap.

Step 5.

The fifth step is the actual setting up of buy or sell orders.

Set up a buy stop pending order 1 pip above the high of the valid bullish Gimmee bar.

On the contrary, set up a sell stop pending order 1 pip below the low of the valid bearish Gimmee bar.

Step 6.

The sixth step is the exit plan.

For the buy order, place the Stop Loss just below the low of the bullish Gimmee bar.

For the sell order, however, place the Stop Loss just above the high of the bearish Gimmee bar.

Take your profit for the buy order at the level where the upper band is currently at and for the sell order where the lower band is currently at.

3. The ‘Bollinger Squeeze’ Strategy – Based on Bollinger Bands Indicator.

The Bollinger Band Squeeze trading strategy capitalizes on finding low values of the Band Width indicator to identify periods of low volatility.

Once low volatility is spotted, a trader can then get ready to trade the Bollinger Band breakout which results from the consolidation.

Step 1.

The first step of this strategy is setting up the indicators. These include:

• A 20-period Bollinger Bands indicator.
• A 20-period Band Width indicator.
• The Donchian Channel on the window where the 20-period Band Width indicator is applied.

Where the BandWidth indicator is missing, you can use the Standard Deviation indicator.

The Bollinger Bands indicator is for spotting a breakout. The Band Width indicator is for spotting low volatility while the Donchian Channel is for highlighting the lowest Band Width indicator values.

Step 2.

The second step involves spotting a trading signal using the 20-period Band Width Indicator.

You must wait for the 20-period Band Width indicator to hit its lowest in the past 120 periods.

This will be highlighted by the Band Width signal line touching or reading below the lower Donchian line.

Step 3.

The third step of the strategy involves confirming the identified trading signal by spotting a Bollinger Band breakout.

A bullish Bollinger Band breakout occurs when a candlestick closes above the 20-period Bollinger upper band.

On the flip side, a bearish Bollinger Band breakout occurs when a candlestick closes below the 20-period Bollinger lower band.

Step 4.

The fourth step is the actual entry of buy or sell positions.

Enter a buy position once a bullish Bollinger Band breakout occurs, preceded by the Band Width hitting its lowest as specified.

On the other hand, enter a sell position once a bearish Bollinger Band breakout occurs, preceded by the Band Width hitting its lowest as specified in step 3.

Step 5.

The fifth step of the strategy covers the exit plan.

You can hold the buy position as long as the price trades above the middle Bollinger Band Moving Average.

On the contrary, you can hold the sell position as long as the price trades below the middle Bollinger Band Moving Average.

4. Bollinger Bands with Double Top or Double Bottom.

This strategy couples Bollinger Band price ranges with the double top or double bottom chart pattern to pick high probability entries.

Only the Bollinger Band indicator and price action are applied in this strategy.

Step 1.

The first step of this strategy is setting up the indicator.

The only indicator here is the Bollinger Bands indicator.

It appears with three bands – a middle moving average and an upper and a lower band.

The upper and lower band are equal standard deviations from the central moving average.

Step 2.

The second step is identifying the double bottom or double top.

The double bottom is a bullish reversal chart pattern resembling the letter ‘W’.

On the other hand, the double top is a bearish reversal chart pattern resembling the letter ‘M’.

Double Bottom (‘W’).

Let us begin by how you can identify the double bottom:

• First, the price must form a reaction low which is usually but not always below the lower Bollinger band.
• Second, the price must then bounce upwards towards the central moving average, then fall again, forming a new low which must hold above the lower Bollinger band.

New low prices holding above the lower Bollinger band shows less weakness on the last price drop.

• Lastly, the pattern is confirmed by a strong upward move off the second low and a break above a resistance level created by the middle pivot point of the ‘W’ pattern.

Double Top (‘M’).

Next, let us see how to identify the double top:

• First, the price must form a reaction high which is usually but not always above the upper Bollinger band.
• Second, the price must then bounce downwards towards the central moving average, then rises again, forming a new high which must remain below the upper Bollinger band.

That new high remains below the lower Bollinger band showing less strength on the last price rise.

• Lastly, the pattern is confirmed by a strong downward move off the second high and a break below a support level created by the middle pivot point of the ‘M’ pattern.

Step 3.

The third step is entering the buy or sell position.

Set up a buy stop pending order at the level of the middle pivot of the ‘W’ or double bottom pattern once the second valid swing low forms.

On the other hand, set up a sell stop pending order at the level of the middle pivot of the ‘M’ or double top pattern once the second valid swing high forms.

Step 4.

The fourth step is the exit plan.

Place the Stop Loss for the buy order just below the second valid swing low of the ‘W’ or double bottom pattern.

However, place the Stop Loss for the sell order just above the second valid swing high of the ‘M’ or double top pattern.

You can then hold the buy position as long as the price remains above the Bollinger middle moving average.

Hold also the sell position as long as the price remains below the middle moving average.

5. The ‘Bollinger Band with MACD’ Strategy.

This strategy makes use of the Bollinger Band and the Moving Average Convergence and Divergence (MACD) indicators to pick trade entries.

MACD is used to establish the market trend while Bollinger Bands are used as a trade trigger.

Step 1.

The first step of this strategy is setting up the indicators. Click on the indicators’ tab and choose MACD.

Adjust the fast MACD moving average to 12, the slow MACD moving average to 26, and the MACD signal line to 9, and then apply the indicator.

Click on the indicators’’ tab again and choose Bollinger Bands.

Adjust the Bollinger Band Moving Average to 12 and the Standard deviations for the bands to 2 and then apply the indicator.

Step 2.

The second step involves establishing a price consolidation or congestion.

This strategy is a breakout strategy and breakouts occur after price congestion.

Therefore, establish a zone of price congestion by having the price slow down the bull or bear move by ranging or forming neutral candlestick patterns.

Step 3.

The third step is the identification of trading signals.

A bullish trading signal is identified where the MACD moving averages are above both the MACD signal line and the zero line.

A bearish trading signal, on the other hand, is identified where the MACD moving averages are below both the MACD signal line and the zero line.

Step 4.

The fourth step of the strategy involves setting up buy or sell orders.

Set up a buy stop pending order at the level where the upper Bollinger Band is currently at, once you obtain a bullish MACD signal as specified above.

On the flip side, set up a sell stop pending order at the level where the lower Bollinger Band is currently at, once you obtain a bearish MACD signal as specified.

Step 5.

The fifth step is the exit plan.

Place the Stop Loss for the buy order 5 pips below the buy order.

On the other hand, place the Stop Loss for the sell order 5 pips above the sell order.

You can measure the height of the price consolidation before the price formed bullish or bearish MACD signals.

That way, you can target the same amount as that height with your Take Profit. You can as well trail your Stop Loss to lock in profits as the position grows.

Wrapping Up.

So among the above trading strategies based on Bollinger Bands, which one have you been trading?

Leave your comment below.

And Happy Trading!

Tagged With : 100 winning with bollinger band indicator • best bollinger band strategy • bollinger band and rsi strategy • bollinger band olymp trade • bollinger band rsi • bollinger band strategi • bollinger band strategie • bollinger band strategie forex • bollinger band stratejileri • bollinger band คือ • bollinger band ตั้งค่า • bollinger band วิธีใช้ • bollinger bandı stratejisi • bollinger bands • bollinger bands and macd • bollinger bands and macd strategy • bollinger bands and rsi • bollinger bands macd • bollinger bands macd strategy • bollinger bands nedir • bollinger bands olymp trade • bollinger bands on rsi • bollinger bands options • bollinger bands rsi strategy • bollinger bands strategie • bollinger bands strategy • bollinger bands with macd • bollinger bands with rsi • bollinger bands กับ rsi • bollinger bands คือ • cara membaca bollinger bands • cara membaca indikator bollinger bands • cara membuat support dan resistance dengan bollinger band • cara menggunakan indikator bollinger band • how to use bollinger bands to trade options • iq option bollinger bands • macd and bollinger bands strategy • olymp trade bollinger bands • reading bollinger bands • rsi bollinger bands • strategi bollinger band olymp trade • what do bollinger bands tell you • การตั้งค่า bollinger band • ตั้งค่า bollinger band • วิธีใช้ bollinger bands