Revisiting Bollinger Bands –
Bollinger Bands are a popular technical analysis tool, but it’s essential to use them wisely. Here’s how to employ the Bollinger Bands indicator effectively and choose the right trading strategy:
So Breakout and Mean Reversion Complement each other.However, it is time frame specific. What is a breakout in 1-minute time frame can fall into Mean Reversion in a higher time frame
Let’s open the Bank India May Futures in our trade setup. Also, colour 1 SD Bollinger as yellow to spot them better.
You can enhance clarity by coloring the 1 SD Bollinger Bands as yellow. Additionally, to achieve a more effective exit strategy, it’s advisable to use the Simple Moving Average (SMA) as the Moving Average Type for the 1 SD Bollinger. Your 15-minute time frame chart should then appear as follows:
Here is our Bollinger Bands Trading Strategy #1 –
The strategy is called BRS (Bollinger Riding Strategy). To spot an uptrend and a potential buy signal:
This is similar to the Famous Three Crow Strategy of Price Action.
The Entropy BRS Strategy was developed by Amit Ghosh in early 2018 while discussing Bollinger Bands and Probability Distribution in the Unofficed Trading Forum.