Bollinger Bands® Strategy

Discussion in 'Trading Strategies' started by MornevanderWesthuizen, Oct 28, 2014.

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  1. Hi, I will like to know if I can achieve the following using your platform:

    1. Bollinger Bands with default settings 20,2

    2. Bollinger Bands with settings 20,3

    For long entry

    Two consecutive candles having exact same high at the low of bollinger bands and 3rd candle breaks the highs gives us a long entry

    For short entry

    Two Consecutive candles having exact same highs at the high of bollinger bands and 3rd candle breaks the lows gives us a short entry
     

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  2. Customer Care

    Customer Care John @ timetotrade

    You can use timetotrade alerts to identify when the long and short entry Bollinger Band chart conditions are met.


    To add the Bollinger Bands, go to the Chart Settings, click on 'Add Indicator', search for 'Bollinger Bands' and then click on the Bollinger Band indicator adjust the Deviations to 2 or 3 for the two variations leaving the period at 20, then repeat to add the second Bollinger Band indicator:

    upload_2014-10-28_17-8-3.png



    Long Entry Strategy

    The Long Entry strategy is based on the following understanding, however clarification on the second trigger is required:
    1. The first two candles have the same High
    2. The Low of the first or second candle to be below the Lower Bollinger Band (20, 2) on the second candle
    3. The third candle High is greater than previous High

    An alert will be created whereby the requirement is for the above three rules to be true at the same time. To create the alert triggers, references will be made to current and past candles. When creating alerts historical candles can be referenced using the 'PAST' indicator. The 'OPEN', 'HIGH', 'LOW' and 'CLOSE' values represent the current candle. The PAST indicator can be used to reference the Open, High, Low or Close values for any candle in the past, as illustrated:
    [​IMG]

    To create the alert for the Long and Short Entry, three custom indicator have been created, which can be imported using the following code: 0E53-4E8E-2C62

    Click on the following link for help importing custom indicators: http://forum.timetotrade.eu/threads/custom-indicators.183/



    Long Entry Strategy: Trigger 1

    To compare the first and second candle highs, use the 'Past Highs' indicator which is the absolute value of the first candle in the past minus the second candle in the past. If the Past High value is zero then first and second candle highs are equal:

    Code:
    Past High = Absolute ( Past(High, 1) - Past(High, 2) )
    Add an alert trigger that checks if the Past High is below a threshold value such as 0.00001 on the EURUSD. Use the falling threshold trigger to add the alert trigger to the alert, then click on the trigger in the Alert Builder to edit it to check if the Past High is below 0.00001. You may wish to increase the 0.00001 value to soften the entry rules where the highs are marginally different:

    upload_2014-10-28_17-16-43.png



    Long Entry Strategy: Trigger 2

    To identify if the first or second candle lows are below the Lower Bollinger Band (20,2) use the 'BBL Low' custom indicator. It is Lowest Low of the first or second candle in the past, minus the Lower Bollinger Band on the second candle. If the value is below zero then either the low of the first or second candle is below the Lower Bollinger Band value on the second candle:

    Code:
    BBL Low = Past( LOWEST( LOW, 2), 1) -  PAST(BBL, 1) 
    Use the falling threshold trigger to add the trigger to the alert, then click on the trigger in the Alert Builder to edit it to check if the BBL Low is below 0:

    upload_2014-10-28_17-19-0.png



    Long Entry Strategy: Trigger 3

    Lastly to identify a new High, the requirement is for the High to increase by the amount defined e.g. 0.00001. Click on the increases by alert trigger on the price chart and select the High price and enter the minimum value that the High price must increase by e.g. 0.00001:

    upload_2014-10-28_17-15-6.png



    Group the alert triggers with the requirement that all of the alert trigger conditions are true at the same time:

    upload_2014-10-28_17-23-49.png



    To learn more about Grouping and Sequencing triggers: http://wiki.timetotrade.eu/Triggers_and_Groups

    Enter a message to remind yourself why the alert was created, set your notification methods and the reactivate time frame, if the requirement is for repeated alerts. Activate or Pause the alert before starting to create the Short Entry Strategy alert.


    Short Entry Strategy

    The Short Entry strategy is based on the following understanding:
    1. The first two candles have the same High
    2. The High of the first or second candle to be above the Upper Bollinger Band (20, 2) on the second candle
    3. The third candle Low is less than previous Low


    Short Entry Strategy: Trigger 1

    To compare the Past Highs use the same trigger and custom indicator described in the 'Long Entry: Trigger 1':

    upload_2014-10-28_17-26-44.png



    Short Entry Strategy: Trigger 2

    To identify if the first or second candle highs are above the Upper Bollinger Band (20,2) use the 'BBU High' custom indicator. It is Highest High of the first or second candle in the past, minus the Upper Bollinger Band on the second candle. If the value is above zero then either the high of the first or second candle is above the Upper Bollinger Band:

    Code:
    BBU High = Past( HIGHEST( HIGH, 2), 1) -  PAST(BBU, 1) 
    Use the falling threshold trigger to add the trigger to the alert, then click on the trigger in the Alert Builder to edit it to check if the BBU High is above 0:

    upload_2014-10-28_17-28-45.png



    Short Entry Strategy: Trigger 3

    Lastly to identify a new Low, the requirement is for the Low to decrease by the amount defined e.g. 0.00001

    upload_2014-10-28_17-29-21.png


    Group the alert triggers with the requirement that all of the alert trigger conditions are true at the same time as per the Long Entry Strategy.



    Back Test

    Once alerts are Activated or Paused they can then be back tested to check if they have been set up correctly. Go to the 'Backtest' tab to backtest that the alerts have been set up correctly, then dial in your alert triggers by adjusting the thresholds in each alert trigger if necessary:

    upload_2014-10-28_17-32-31.png

    The alert can also be used to execute a simulated or real trade. In the following example a Forex trading strategy will be tested based on buying when the Long Entry Strategy alert conditions are met with a 20 pip profit target and 40 pip stop loss:

    upload_2014-10-28_17-37-55.png


    Go to the 'Backtest' tab to backtest the trading strategy:

    upload_2014-10-28_17-38-20.png


    In this example that strategy worked well in a bullish market:

    upload_2014-10-28_17-39-46.png



    To learn more about back testing: http://forum.timetotrade.eu/threads/how-does-the-back-testing-work.80/


    Open a FREE timetotrade account today:
     
    Last edited: Oct 28, 2014

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