Examples of Bollinger Bands Trading Strategy

Let’s inspect Gail May Futures –bollinger bands trading strategy

Just have a look with your common sense you can tell Gail is high beta and hence we can not find any much trading opportunity amidst the noise of lower timeframes

Gail Share Price

In case you are confused with the sell signal part –

To spot downtrend and trading opportunity for a sell signal,

  • One red candle has its close outside 1 SD Bollinger.
  • The next candle closes and opens below lower bands of 1 SD Bollinger.
  • You enter at the “close” of the second red candle on the time of formation of the 3rd candle.
  • You close when the candle touches the median of 1 SD Bollinger.

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

  • So far you have entered in the 3rd candle. If the candle ended as green after your entry. (You have entered the trade in the middle of 3rd candle formation right?)
  • Here is what you do stay on the 4th candle – Immediately put 2 buy orders at the “high” of the last candle. Because it will not only exit you from the sell order; it will also open a buy position.

This tricky condition to minimize loss and maximize profit is itself another strategy and I call it 3BB strategy because of the “green-green-red” or “red-red-green” formation.

Let’s come to the Sun TV May Futures sell trade –

To clean the confusion in case you have missed the Titan May Futures example –

If you enter with normal BBR setup your exit is at median Bollinger crossover. This can not lead to a huge loss anyway because in BBR if median Bollinger crossover never came, it means you’re heading towards huge profit.

If you enter with 3BB setup your first stop loss is at 3rd candle’s high (in the case of buy scenario) or low (in the case of sell scenario). Now, as 3BB setups have a high probability of crossing the median Bollinger with full confidence we don’t modify the stop loss till it crosses the median Bollinger.

Then we put trailing stop loss based on price action i.e. previous candle’s high (in the case of buy scenario) or low (in the case of sell scenario).