Bollinger Bands Trading Strategies- A quick insight into facts you need to know

While searching for trending strategies for forex you are more than likely to come across the Bollinger bands trading strategy. This is because it is considered to be one of the best trading strategies out there; the reason for this will be explained as there are some key things you may want to know about Bollinger Bands and how you can make use of this trading strategy.

The basics of Bollinger Band Trading Strategies: 

Most of us are familiar with the terms for technical analysis patterns such as symmetrical triangles, ascending triangles, double tops or double bottoms while trading for forex. However, many people are unaware that using Bollinger bands indicators can enhance your trading stimulus and improve the accuracy of your analysis by leaps and bounds. It can also add momentum to the 15 minutes trade, the game changer for every trader. Additionally, it will also help you to track the peak and lowest position of the forex throughout the day. Another important characteristic of the Bollinger bands are that the coiling structure offers a steady indication to the trending or breakdown position of the price.  For example, when the bands are coiling very tightly it has reached the position of either a breakdown or a price breakout. These maybe difficult times which may reflect the times of low volatility range.

Below is a great infographic which goes into detail about using Bollinger Bands as a trading strategy in Forex:

The indicators and their effect:

What makes Bollinger bands unique to other trading strategies is the use of its indicators, as these indicators are very powerful and so are highly useful to traders. Many traders consider their success to be due to their reliance on the indicators of Bollinger bands. Based on the price structure of a stock Bollinger bands, they are a mixture of highs and lows.They key to the differentiation of the Bollinger band indicator is that they are based on the moving average, whichreflects the intermediate term trend of the stock.The middle band is generally known as the trend indicator, while the lower bands and upper band measure the volatility downside and upside, all of which are calculated as two standard deviations from the middle band.

Some of the Bollinger Bands strategy and their features

Double Bottoms and Bollinger Bands: This Bollinger band strategy that has a double bottom setup. The structure of this band is such that the initial bottom of this formation provides strength and volume which reflects on the sharp price pullback which closes outside of the lower Bollinger band. There is a kind of rally of processes which tends to occur before the stock lifts higher. Towards the end, the price attempts to retest the lows that have been set in process. The indication latter on that the downward pressure has subsided leads to a shift from seller to buyers.

Reversals with Bollinger Bands: A simple method to control the fading stocks that move outside the band is the reversals with Bollinger bands process. It is an effective trading technique that takes you a step forward with your analysis. For example, instead of differentiating the stock as it gaps up through its upper band limit with the reversal process you can wait to see its performance. Again if it is outside the Bollinger bands and closes near a low point, it will be an indicator that the stock will correct on the near-term.

Bollinger Band Squeeze: An interesting Bollinger band strategy is the Bollinger Band Squeeze. It involves a simple equation of Upper Bollinger Band Value minus the Lower Bollinger Band Value, divided by the Middle Bollinger Band Value (also called the Simple moving average).With this strategy you can expect the volatility to increase when the indicator reaches its lowest level, additional indicators such as volume expanding can also be considered.

Though all of them are equally great, considering many indicators can give you a confused feeling. So among the various strategies of Bollinger bands chose that one that suits you the best.