Bollinger bands

Beginner Questions
1

Hi All,

As I new trader to FX, I wanted to get your thoughts on trading bollinger bands. I’ve been live trading for about a month now, only to the value of about �1-2 per pip while I understand the markets better, but I’ve been exclusively using bollinger bands on a 4 hour chart. i.e when the price exceeds the upper SD by about 20 pips I sell on a target of 50 pips with fairly tight stop losses and conversely buy when it exceeds the lower SD.

I don’t trade around news releases either to take out extreme volatility.
So far its seems to have worked well as I take on average 50-75 pips a day, which seems ok for a part time trader,but the real question is, is this a viable strategy for larger trades or have I been lucky so far using a simple system?

Thanks for your input

2

There is only one way to definitely find out & that is
to trade it.

If this system is working for you then move it on up, but
gradually, even try it on a demo account while still using
the system you have on the smaller time frames in your
live account.

I trial 1 or 2 systems at a time on a demo account, watching
the way in which they perform compared to my own system.

3

Perhaps this answers your question. Chart from earlier this year with probably 12 successive losses depending on how you structured your trade. You must test repeatedly across different markets to understand how your system performs and whether even if profitable you could actually trade it. Doesnt sound like you have done that

ScreenHunter_01 Dec. 13 21.28.jpg700×384 19.1 KB

4

Tony’s point about testing is spot on. Test and test and test some more!

It’s also worth noting that even Bollinger himself doesn’t advise trading against breaches of the Bands.

5

what happens if you use bollinger bands on a 30 minute frame?

6

They aren’t timeframe specific. You can use Bollingers at any timeframe. Some folks like to alter the settings when going shorter or longer than daily, though.

7

Thanks Rhody, So What Adjustments Do I Need For A 30 Minute Time Frame Using Bollinger Bands?

8

You don’t [I]need[/I] to make any. Depends on how you want to use them. For my work they are strickly a measure of volatility, and I don’t generally make any changes at all when switching between timeframes.

9

thanks. i use them to spot trend breakouts.

10

have I been lucky so far using a simple system?

Yes, I think you have. :stuck_out_tongue: :stuck_out_tongue: :wink:

Breaches of the Bolinger Bands alone is not enough to be sure of a short trade. More likely, the breaches are a sign of a continuing trend ie a walking of the band.

Coupled with a strong candlestick pattern that signals a reversal, is a much better way to go.

In the end, it is a probability game, a win is still not guaranteed.

11

thanks for the replies. They’ve been very helpful especially the comment that bollinger himself doesn’t recommend trading against the bands!

just to give you a bit more info. I trade the majority of the majors and some others, and yes there have been consecutive losses, as tony pointed out on the chart, but I thought the probability is that 95% of the prices were in this range in the abscence of news, and as tymen pointed out trading a number of pairs it seems the probability is that prices outside the SD are an anomaly and do return towards the average be that up or down

I know its a bit of a blunderbuss approach, but seems to be working for the time being, and having read the baby pips school and other techniques I am working on a different, more targeted, system and any help would be appriciated