Developing a System #5 (10-20 pips with BB break)
Submitted by Edward Revy on August 24, 2008 - 16:24.
Submitted by Andy Parker
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Hi all. I am new to forex and, like you, are searching for the "holy grail" of trading. I haven't found it yet but I have been looking at trading using bollinger bands and have observed the following: Using any currency pair (or index) using candlesticks and using 1 hour, 4 hour or 1 day timeframes add bollinger bands with settings 20,2.
Now, please forgive me here if I'm repeating what others have already observed but I noticed that if a candle breaks through the upper band it usually goes on to make 10-20 pips long. Likewise if the candle drops through the lower band it usually makes 10-20 pips short.
The interesting thing is that the odds of success seem to be better if the candle STARTS between the bands and then breaks out through either the upper or lower band rather than starting outside of the bands.
As I said I'm no expert and I've never made money consistently at forex but I'm intrigued by my observation and would appreciate your comments or suggestions on how this could be possibly turned into a "proper" reliable strategy.
Likewise, if you feel that following this course is unlikely to bring success for whatever reason please let me know. All comments are valuable.
Kindest regards
Andy Parker
Edward Revy,
http://forex-strategies-revealed.com/
Copyright © Forex Strategies Revealed
best
Andy, Do you wait for the candle to CLOSE before you make the trade or do you enter the trade as soon as price breaks the band?
I always use BB but with different style. My style is wait when price break the upper line. If price break 30pips (For GBPUSD) then we enter sell. And if price break lower line about 30 pips then we enter buy. Take profit about 40pips.
i think you have done a good job.....................
Not bad, not bad at all Andy. Good observation.
I think I will test it only at europe or US open, when the moves are wild. Thanks for a great idea.
Example: hourly charts GBP/USD.
The higher the time frame, the more certain will be the chance to get 10-20 pips outside BB.
The problem is: the borders of the Bollinger bands indicators are moving with the price. Until a candle is closed and parameters are fixed, it is difficult to see a breakout, unlike looking back at historical charts.
Still, the idea is very much viable and I think what one can do is to use it when planning on stops and profit targets with Bollinger bands indicator.
Price tends to overshoot bollinger bands boders, so stops must never be set close to BB.
If price is overshooting BB, one can make additional 10-20 pips before closing a position.
Regards,
Edward
Any picture?
Dear Andy,
In any system if you are using multi time frame for trade then chances of success are more. I appreciate ur efforts.
Regards,
Nagendra
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