Forex trading strategy #10 (H4 Bollinger Band Strategy)

Hi Joe

Nice site!

I traded a similar style for a while called the bollinger peak a boo where you wait for one bar to close ouside the band then the next one inside and then trade it to the 20EMA. But after 15 trades I was up only 50 pips. I will have to check out your version.

I thought this was meant to be a "bollinger breakout" method?

. I have a great and simple way to use bollinger bands on the H4 to get massive breakouts - Sometimes up to 1000 pips (if you let it run over a week or two)

You simply wait until the bands narrow (the smaller the better) and then when there is a massive break of the band and they suddenly look very "steep" I enter in the direction of the break (after the bar closes).

It's very consistant but one thing you have to watch is the volatility at such times. You need quite a wide stop depending on the market I usually use a 100 pt stop because it often pulls back a bit before dropping again.

The other thing that can cause headaches is where to take your profit. You can get massive movements by waiting until the price closes back over the 20EMA but you can also get whipsawed this way and go from 150 PIPS profit to nothing.

All the same the risk reward ratio on these trades is excellent. You should aim for a minimum of 200 PIPS. But of course this is a personal thing and you should test all this yourself to find what you're comfortable with.

I tried to include a screenshot as an example of one of these trades but it won't let me pste it on here.

Let me know what you think
Simon
Australia

I visited your site and noticed something on the posted results. You show your entry and target limit and S/L but your Limit is much smaller than your SL... Basically you are willing to risk say 50 pips of loss to gain 35 pips of gain. Isnt this a really horrible risk/gain ratio? most traders recommend a 2:1 or 3:1 gain/risk ratio.

Not necessary it is not a constraint if it breaks the upper band it will stay there maybe the next candle it will colse under it or maybe it will continue up as EURJPY is doing now, what I do is the following: lets say that the price touches the lower band and it closes above it ok ? then I will do LONG with target the upper band, so if the price goes up and touches the upper band I will not exit directly I will wait till the 4 hours candle is formed and if I see it closes under the lower band I will exit immediatelly, if it closes above it I will wait the next candle if the next candle closes under the upper band I will exit if it stays above it I will reserve it. If you observe the chart very well you will discover alot of things, I encourage you to focus well on it.

Dear Joe,
Thank you for sharing your ideas with us.
What happens if the price breaks the upper band and continues upwards? is it a long signal?
Best Regards,
Gift

Dear Thomas;

I will explain it again, I will open the EURJPY currency on H4 timeframe. Now I see a candle is touching the upper Band the price is going above it then under it, I wait till this 4 hours candle is finished, if it (1- closes under the upper band and it didn't break it. 2- OR if it opens above the upperband and closes under it), so I consider the upper band is a Resistance and I short at the current closing candle, my Target will be the Lower band or 100 pips. It is simple.

This technique is the basic of my strategy, sure I use other things with it to confirm a trade, and it is very powerful, you can see its performance on my website : http://rpchost.com

Good Luck Thomas

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Good Luck

Hi

I am wondering something about what you commented. (rt you will see that most of time the price hit the upper band then it retraces back to Lower Band, so how I trade is very easy, I wait till the price touches let’s say the upper band and closes under it (not above it) and wait till the candle is formed, when it finishes and the next candle opens under the previous Upper band then I enter a Short trade with target = 100 pips or until it touches the Lower Band.)

I do not understand by en it finishes and the next candle opens under the previous Upper band then I enter a Short trade with target. What do you mean by opens under the previous band? What happens if the price closes above the upper band and then it comes back into the band. Is it some indicator for entering a short trade?

Regards
Thomas

Nice one, indicators like BB are better on higher time frame:

Thanks,

James Ayetemimowa

DearJoe,
Can I get some free signals from your site,payment will be preferrable.
Best regards,

Ele