As most people know, I am currently doing trading challenge on this forum. I want to grow 100 $ to 3778 $ by making 1% profit every day and letting people balance for a whole year. At the moment everything is going well and I am even 37 days ahead of schedule. Since my balance should normally be $ 125 on day 23, balance has already grown to $ 182.
During this challenge I only use 1 simple tool / indicator the bollinger band to place my trades. Many people ask me how to use those bollinger bands. That's why I'm going to do a little explanation here.
Many recreational and professional traders use the bollinger belt as an indicator. I myself love this indicator because it is pretty accurate. 80-85% of the time the markets do not really have a trend and the candles between the lower and upper bollinger band are waving. So in 80-85% of the cases the price will bounce back when the candle touches or breaks the bottom band. Conversely, the candles will go back down when the candles touch the upper belt or just break. So for 80-85% of the time you can take countless trades with a 'microprofit'.
So this is what I do. I usually place a position manually when the candle touches the bottom bollinger or just breaks and then I put different sells up to the top bollinger. With these sells you can usually take 0.5 to 2% profits per position. If you do this several times a day, you can make a nice profit every day.
Example of a wavy market between the bollingers. tip: View the market on 5-minute timeframe. As you can see on the chart below, this market has been waving between the Bollingers since 6:40 this morning. During this period there have already been several opportunities to take a profit a few times even though there is not much movement in the market.
So this is the first way to take multiple profits per day through the bollinger bands.
In addition, the bollinger can also be used in a different way, but then the movement must be accompanied by a squeeze. A squeeze is described in different ways, but I personally speak of a squeeze that the top and bottom bollinger come together to the point that the difference between the 2 lines is 1.5% or less. So at BTC / USDT set the top is 3535 $ and the bottom at 3500. This is a difference of 35 $ (1%) and then I speak of a squeeze.
When a squeeze occurs you have to be careful and take a few other factors into account. Because a squeeze can be accompanied by a sudden pump, but can also be the introduction of a sudden dip of several percent.
So how do you analyze when you notice that the bollingers are starting to squeeze?
If you notice that the bollingers are starting to squeeze, you should look at the following factors before placing a trade.
- The bulbs squeeze but at the same time they make a slight upward or downward movement
- Check whether the candles make a slight upward or downward movement.
- And finally keep an eye on the volume that flows in or out of the coin.
You can expect a pump (in most cases) as
1. The bollinger squeezes up to 1.5% or less
2. Make the bollinger a slight upward movement during squeezing
3. The candles at the same time are also on the rise overall
4. Volume in the coin starts to flow.
next screenshot shows this situation. You see the bolling squeezes while they are in a very slight upward trend. The candles also move slightly upwards. Suddenly he goes through the bollinger and the volume increases considerably, leading to a pump of several percent.
A dump can be expected (in most cases) as
1. bollingers squeezed up to 1.5% or less
2. Make the bulbs a slight downward movement during squeezing
3. Candles have a slight downtrend
4. Plot volume that goes out of the coin.
Next screenshot shows a dump that already had the indications to lead to a dump.
So the squeeze is another way to take profits on your trades with the help of the bollinger only you have to approach the time of a position differently.
During a squeeze that indicates a possible dump you buy yourself when the candles begin to push against the upper belt.
When all signals indicate a dump you can best place purchase orders of 5 to 15% lower than the current value. My tip place multiple orders and spread your balance. If I receive a signal that initiates a possible dump, I usually place 4 orders. 20% balance at -5%, 20% at -7.5%, 30% at -10% and 30% at -12.5 to 15%.
Hopefully this will clarify the way I work. Just keep in mind. 80% of the time there is no real trend in the market. So it does not matter if you are in a bear or bull market. 80% of the time the prices hover between the bollingers. So 80% of the time profits can be made by using only one simple tool. And another extra advantage. No further technical knowledge or analysis is required to apply this strategy. So as I have said several times, this strategy can even be learned and applied by a child of 6-7 years.
This shows that by using your common sense and by using a simple but accurate indicator you can make nice profits with trading in every type of market
This is well explained and I really appreciate that! The Bollinger band indicator is one of the leading indicators that show us the trend, the force and stop loss and takes profits. I learned how to used this powerful trading tools in 2011 and it was helpful in stocks markets and forex trading. If you know how to interpret Bollinger band very well you might not need other technical indicators as it comprise all other indicators in interpretation of the market. Many traders used it as a support and resistance level and some used it to kown breakout or fake out.
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