The Bollinger Bands strategy combines the Support and Resistance indicator to open orders based on a reversal signal. The accuracy of the strategy’s signals is 70%, which is relatively high when trading Fixed Time Trade.
Bollinger Bands combines Support and Resistance
If you do not know the Bollinger Bands indicator, you can read the following article:
And knowledge of Support and Resistance is also indispensable; you should know through the article below before continuing:
This strategy is suitable for currency pairs with USD because of the stability of the USD. Based on the low volatility, you can run 1 minute session time with 1 minute fixed time.
Fixed Time Trade with 1 minute fixed time means that you are trading short-term positions, relying on nearby candlestick groups to predict the trend.
And it would be best if you didn’t increase the stake or decrease.
Opening order signal
Bollinger Bands combine Resistance and Support indicator give the following signal:
Open an up order
A signal appeared when data moved out of the lower band of Bollinger Bands creating a red candle with the closing price just above the support level.
That point is a good time to open a bullish trade, as the price will immediately move back into the Bollinger Bands.
Open a down order
When the price goes out of the upper Band and creates one green candlestick near right below a resistance threshold, you should immediately put a bearish trade.
Time to enter the order
About trading timing, when a signal appears, you should trade as soon as possible following the described point below:
- Candlestick closes outside of the Band and opens a new candle.
- Price is in the Resistance/Support zone.
Some signals may be perfect but have a chance of reverse results, so there are several times you will lose. However, throughout research, it shows that for every 10 orders opened, 7 orders won. So this is a model worth trying because the lower the risk, the more likely you will be profitable. Below is an example of combining Bollinger Bands and Support/Resistance indicator.
- Point (1) indicates that the price closed outside the upper band and near a resistance threshold. But as you can see the strong momentum, the signal candlestick is too long. Likely, it will not reverse. Try to open a bearish order, but the result is negative. Losses: 1.
- At point (2), the price again crossed the upper Band and hit a resistance. You open the order as usual because this point is safe. Wins: 1.
- At point (3), the price closed outside the lower band but was not near any support threshold. It is best not to open orders.
- Point (4) is now perfect, as it hits the support level, low momentum, closed outside the lower Band. This is a classic sign of a trend reversal to put a bullish trade. Wins: 2.
In such a short session, hit 3 orders and gave very positive results, 2 wins 1 lose. At point (1) there is strange fluctuation, strong motivation. This signal should not be open for trading. So if the better case is, you can win 2 or 3 with 0 loss.
Open a short position
For traders, a 60 second FTT order is minimal and risky. Because in a short time, it will not be possible to grasp the market perfectly. So this way of fighting, the win rate is only 70% after a series of calculations.
Besides, earning money too quickly after making a decision will create greed. Increase the bet regardless.
The risks of trend reversal trading
You trade on a safe currency pair, but the way of focusing on trend reversal movements is hard to say stability here. Sometimes reversal is just because many investors suddenly sell/buy in bulk.
The reversal trading requires patience, a strong mentality. The prerequisite is no stuffing and increasing bets when trading in reverse mode. This rule helps you avoid losing everything.
Traderrr recommends that you keep track of 3 to 4 currency pairs, and there should be a limit of 8 orders per currency pair. This rule will help you avoid risk as much as possible.
Other indicators associated with Bollinger Bands :