Entropy Core Strategies

BRS Bollinger Bands Trading Strategy

2 Topics
Entropy Advanced Strategies

Entropy Scanners

Backtest Entropy Alpha Strategy with Futures Data Part I

Backtest Entropy Alpha Strategy with Futures Data Part II

Backtest Entropy Alpha Strategy with Equities Data

Entropy FAQs

Entropy Trading Examples

Here is our Bollinger Bands Trading Strategy #2 –

Here is another tricky condition to minimize loss (and maximize profit):

- After entering the trade in the middle of the 3rd candle formation (as discussed earlier), you should closely monitor the candle’s color.
- If the 3rd candle ends as a red candle, indicating a potential reversal or downward movement, take the following action:
- Stay in the trade and immediately place two sell orders at the “low” of the last (3rd) candle. This action accomplishes two objectives:
- It exits you from the initial buy order.
- It opens a new sell position, aligning with the 3BB (3 Bollinger Bands) strategy previously discussed with live trades.

The 3BB strategy carries a high probability of breaking the median Bollinger Band with a 98.5% confidence level.

To enhance the likelihood of a 3BB scenario, look for specific conditions in the 2nd candle:

- The 2nd candle should close above the upper band of the 2SD (2 Standard Deviations) Bollinger Band, indicating potential upward momentum.
- To further confirm the 3BB case, prefer the closure of the 2nd candle with the following criteria:
- The open and close of the green candle should fall within both the 1 SD Bollinger Band and the 2 SD Bollinger Band.

When the second candle concludes its session above the upper band of the 2SD Bollinger, it signals a robust potential for a 3BB scenario. Therefore, my preference is for the second candle to conclude its session within the upper boundaries of both the 1 SD Bollinger and 2 SD Bollinger.

By ‘closure,’ I mean that both the opening and closing prices of the green candle fall within the range defined by the 1 SD and 2 SD Bollinger bands.

By following this strategy, you aim to minimize losses by responding to potential reversal signals and maximize profits by taking advantage of the 3BB strategy’s high-confidence breakout opportunities.

Post a comment