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Chapter 12, Part I. Bollinger Bands. Page 7

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 19, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: Any. Do you write all of this stuff down? This is important. And now some additional advice:

    1. If the market penetrates BB band and couldn’t reach the MA line – middle of the range between the bands, then it tells about power of the market in this direction and that the previous move has a solid odds to continue. Just look at chart #5 – market penetrates lower band, but was not able to return even to blue MA line. Then, the move down continues…;

    2. BB bands, especially by applying 2.5-3 deviations and about 20-period could be used as an indicator of overbought/oversold levels and conditions on the market. When the market touches the upper band – the market is overbought, when it touches the lower one – oversold. It is preferable to apply this method not lower than on the daily time frame. A combination of Oversold+ Fib support or Overbought + Fib Resistance has a greater probability to stop the market for some time.

    3. BB bands could save you from unwelcome areas to enter the market. It’s safer to buy in the lower half of the range, and Sell in the higher half of the range. Also avoid entering the market, when it stands at the bands – long at higher band, and short at lower band. Because, as we’ve said already – there is a high probability of bouncing in the middle of the range.



    4. As with any other indicator, BB demands fine tuning, by analyzing its application with different pairs and time frames. You should find parameters that most suitable for your trading style and pairs that you trade.
     
    Hamza Samiullah and fran alvarez like this.
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