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Bollinger Bands Trading Strategy
Bollinger band indicator will give the early signal, whether the market is moving towards the bullish side or bearish side.
If the Bollinger band is in a narrow position, that means contracting, and the signal is that market is in consolidation mode, so do not enter any trade while the market is in consolidation mode; wait for the scrip for picking movement.
The signal of whether the market is picking movement is, our Bollinger band indicator will expand, or it will show some expansion moment.
You can enter the trade after the expansion of the Bollinger band indicator.
Remember bollinger band strategy will show whether the market is in bullish mode, consolidation mode, or bearish mode.
When the 5-minute candle has opened outside the Bollinger band, that trade will not be much effective.
Trade will be effective when the candle stays on the inner side of the Bollinger band.
I will trade when the candle is on the inner side of the Bollinger band.
I will avoid trading when the candle opens outside the Bollinger band.
Remember one thing Bollinger bands trading strategy will work more effectively on the combination of moving average, RSI.
How To Trade In Stock Intraday With The Help Of Moving Average In Bollinger Band Trading Strategy.
Trading by using the moving average will be accurate with the Bollinger band indicator.
Enter the long trade, when a cross-over of moving average takes place towards the bullish side.
And your stop loss should be the day low.
And your target would be according to your risk-reward ratio.
Enter the short trade when a cross-over of moving average takes place towards the bearish side.
And your stop loss should be the day high.
And your target would be according to your risk-reward ratio.
I suggest the 5 minute time frame for the intraday traders.
How To Trade In Stock Intraday With The Help Of Relative Strength Index (RSI) In Bollinger Band Trading Strategy?
The relative strength index will be helpful to take the trade or exit from the market.
RSI will confirm to take the trade or exit.
If the RSI level is above the value of 50, then it is the most probable of entering the buy trade with the confirmation of bollinger band strategy.
If you had entered the trade above the RSI 50 level, In the middle of the market, if the value of the RSI drops below 50 (It will occur in rare cases), In that case, the trade may not perform most accurately.
Remember one thing; all indicators will show the direction of the market.
How Different Moving Averages Will Be Helpful for Bollinger Band Strategy?
In this strategy, we use three moving averages instead of two, the short-term, midterm, and long-term moving average.
The short-term moving average is to pull the trigger; when it crosses above or below the mid-term moving average, it gives the enter and exit signal.
Long term moving average is to tell about the trend.
We can buy when the short-term moving average crosses above both the midterm and long-term moving average.
Exit when the short-term moving average crosses down the midterm moving average.
Sell when the short-term moving average crosses down both the mid-term and long-term moving average.
Exit when the short-term moving average crosses above the mid-term moving average.
Each moving average should be multiple of two from one another.
The short-term moving average is five periods.
The mid-term moving average is ten periods.
The long-term moving average is 20 periods.
We will add the Bollinger band to our Bollinger band strategy crossover setup to avoid false signals.
When getting a buying signal in the Bollinger band’s trading strategy, the Bollinger band will slope towards the buying side.
The Bollinger band will slope towards the selling side when getting the selling signal in the Bollinger bands trading strategy.
When getting the false signals, the Bollinger band will move horizontally without sloping towards the buying or selling side.
Target should be 1:1 and more, and stop-loss should be at the day low in Bollinger Bands Strategy.
Bollinger band will give the early signal, whether the market is moving towards the bullish side or bearish side.
If the Bollinger band is in a narrow position, that means contracting, and the signal is that market is in consolidation mode, so do not enter any trade while the market is in consolidation mode; wait for the scrip for picking movement.
The signal of whether the market is picking movement is, our indicator Bollinger band will expand, or it will show some expansion moment.
You can enter the trade after the expansion of the Bollinger band.
Remember bollinger band strategy will show whether the market is in bullish mode, consolidation mode, or bearish mode.
When the candle has opened outside the Bollinger band, that trade will not be much effective.
Trade will be effective when the candle stays on the inner side of the Bollinger band indicator.
I will trade when the candle is on the inner side of the Bollinger band.
I will avoid trading when the candle opens outside the Bollinger band.
By combining RSI and Bollinger band indicator, the trade will be accurate and profitable.
All the above cases discussed are all probabilities; there are no sure shot points in the stock market.
I may confidently say that if you follow the above rules, you can get the most accurate trade on Bollinger band trading strategy.
The trading view platform is the ocean of indicators and screeners also available in this platform.
Tools that can be helpful for bollinger band strategy are under one roof.
Screeners which are helpful for stock picking are available in the trading view platform.
For more accurate and profitable information you can contact us.
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