Bollinger Bands are a popular technical analysis tool used by traders to identify potential price breakouts and reversals. Developed by John Bollinger, the indicator consists of three lines: a simple moving average (usually 20 periods) in the middle, and two standard deviation lines—one above and one below the moving average.
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These bands expand and contract based on market volatility, making them useful for assessing periods of high and low price fluctuation. When the bands are narrow, it typically signals consolidation and the potential for a breakout. Conversely, wide bands indicate increased volatility and potential trend continuation or exhaustion.
Traders often use Bollinger Bands in conjunction with price action to determine entry and exit points. A common strategy is to buy when the price touches or moves just below the lower band in an uptrend, suggesting a potential oversold condition. Conversely, a sell signal might occur when the price touches or exceeds the upper band in a downtrend, implying an overbought market. However, these touches alone aren't foolproof signals; traders often confirm them using additional indicators like RSI or MACD to strengthen their trading thesis and reduce false signals.
Another powerful use of Bollinger Bands is the "Bollinger Squeeze," which occurs when the bands contract significantly due to low volatility. This squeeze indicates that a major price movement could be imminent. Traders monitor for a breakout above or below the bands to catch the next big move. The direction of the breakout often determines the direction of the trade. Combining Bollinger Bands with volume analysis or candlestick patterns can enhance the effectiveness of this setup. Overall, Bollinger Bands provide a dynamic framework for understanding price volatility and timing trades more effectively.
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Risk Disclaimer: Trading options involves financial risk and may not be appropriate for all investors. The information presented here is for information and educational purposes only and should not be considered an offer or solicitation to buy or sell any financial instrument. Any trading decisions that you make are solely your responsibility. Past performance is not necessarily indicative of future results.
00:00This is the best Bollinger Bands trading strategy.
00:03Add Bollinger Bands to your chart, change period to 50, and deviation to 1.5.
00:10I only use the upper and lower Bollinger Band, and upper red line is sell, lower green line is buy.
00:20Set expiration time to 5 seconds, and make sure screen size is M10 on desktop, or default on mobile.
00:27And if price move below the green line, open a 5 second binary higher.
00:32We also want price to make a lower low, when moving below the Bollinger Band.
00:40Let's see if price can make a new low below the green Bollinger Band.
00:44A move below the green Bollinger Band, and a lower low.
00:48So I open a 5 second binary option higher, and that's a nice $192 payout.
00:54Let's check another chart.
00:55Another lower low below the green Bollinger Band, so I open a 5 second binary option higher, and once again, a $192 payout.
01:06If price now move up, make a higher high and cross red Bollinger Band, I will open a 5 second binary lower.
01:12That's our signal.
01:15Third win in a row, and another $192 payout.
01:19Higher high and cross red Bollinger Band, so another 5 second binary lower.
01:23That's our first loss.
01:25Let's check another chart.
01:27I tested this 5 second trading strategy 1,000 times to find its win rate, and this strategy got a 87% win rate trading on pocket option, so 873 wins and only 127 losses.
01:39Higher high above the red Bollinger Band.
01:42Another $192 payout.
01:44Let's see if price can move below the lower Bollinger Bands for a higher signal.
01:52Preferably also below that most recent low.
01:56Oops, double entry, but that's fine.
01:58Two $192 payouts.
02:03Lower low below the Bollinger Band, so that's another higher signal.
02:08And another $192 payout.
02:11This is a very profitable trading strategy.
02:14Will we see a higher high above the red Bollinger Band?
02:16Yes, open a 5 second binary lower.
02:20Wow, another $192 payout.
02:23Higher high above the Bollinger Band.
02:25Open a 5 second binary lower.
02:27Amazing, another $192 payout.
02:32Let's check another chart.
02:34Higher high above the red Bollinger Band.
02:365 second lower.
02:40Perfection $192 payout.
02:43Click that like button and subscribe if you enjoy this as much as I do.
02:47Another higher high above the red Bollinger Band.
02:51And once again, a $192 payout.
02:54Click first link in description to try this strategy.
02:57And re-watch this video a few times so you have the right settings and really understand this strategy.
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