Bollinger Bands Strategy, a basic overview


bollinger bands

How to use Bollinger Bands

We want to give you some insight into the Bollinger bands trading strategy, which is one of the best options for 4-hour chart trading strategies.

Here are the criteria to enter a trade:

-Look for a pierce of the top or bottom of the Bollinger Band

-Wait for a strong bar going the opposite direction of the pierce 

-Make your entry when the bar exceeds the previous high or low (depending on what direction you’re going) 

-Set your stop-loss below or above the previously closed candle

-Set your limit at the 20 Point MA or just drag your stop behind it until you’re taken out

Since I have adopted it, it has allowed my account to increase by a few percent each day which adds up VERY quickly. The strategy is all based on Bollinger bands.

A Bollinger band is a forex indicator that is designed to show when a pair is overbought over-sold. In short, when a pair is too high or too low, you wait for a signal going the other way. The best way to describe it is to show you. Below is a trade that I made in the past based on the Bollinger Bands Strategy.

As you can see, I took the long because the tails from previous candles pierced the bottom of the Bollinger band showing that the price was over-extended and was ready to turn. After getting two bullish bars the other way, I was confident the reversal had started. I put a box around to other times that the Bollinger band was pierced and move up, and you can see how big the moves are.

The awesome thing about this strategy is that it works on any time frame. On the trade below this trade went for 500 pips. I will warn you that the smaller the time frame, the less likely the Bollinger band strategy is effective. It is a PERFECT day and 4hr strategy.










Thanks for reading!

To learn my trading system which can be used with Bollinger Bands go ahead click here right now to learn it. I will offer you a two week trial to my trading system!


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  • Phuong Nguyen

    It’s very easy to understand. I look forward to reading more about this topic. Thanks a lot for your post!

  • Amir Zafari

    Hi, Tnx for sharing, I’m a BB lover too .
    As BB’s indicates such fake signals specially iv trend continual situations, I use some unusual format. I turn them more wide, instead of UB I use it’s offset by 1(level) but applied to High obviously & instead of LB I use it’s offset by 1 but applied to Low and obviously different BB from first one. I omitt all another lines and then remained UB(from BB#1) & LB(from BB#2).
    I’ll add SMA20 manually at the end.Now we have a new shape BB, less signals and definitely not fake. Curious to know your Ideas about it. (Real Trade==> worked nicely)  

  • Haniffa

    I have question on your Bollinger trading strategy. If you find that in the 4H chart the candles hitting the bottom line of the Bollinger you would expect to go up subsequently. If however at the same time you find the daily chart showing the candles hitting the upper line then you would expect it ti go down subsequently. Would you take the trade in the 4H  or go for the daily instead. would value your advice.

  • Anonymous

    That is definitely a good idea. I have been working on adding some more details to my plan, so that is one that I will certainly take into consideration. I think scaling out, especially on a long time-frame trade like 4hr or daily is always a great idea.

  • superman0453

    Hi Nathan,
    Sorry for not getting back any earlier. I am more impatience, so I look for trades in the H1 timeframes. I have watched your latest video, clear and sharp. Maybe you can incorporate parabolic SAR in your exit setup. When SAR touches the middle of the band (MA20) take half off the table. Normally, when SAR crosses the MA20, the move is almost exhausted. Take the other half when price touches SAR or MA20 depending which is earlier.    

  • Anonymous

    There is no limit, but like you said, if you get several bars in a row that are piercing the band, that is a very good sign that it is ready to turn around and if you get one BIG bar going the other way, I would not hesitate to take the trade. I would say that if you are trading on the 4hr charts, you need a bar with at least 50 pips of movement to feel very confident about the entry.

  • Anonymous

    I use the default settings, which should be deviation of 2, 20 point, apply to close.

  • Anonymous

    I use the default settings, which should be deviation of 2, 20 point, apply to close.

  • Anonymous

    I use the default settings, which should be deviation of 2, 20 point, apply to close.

  • Anonymous

    I use the default settings, which should be deviation of 2, 20 point, apply to close.

  • Anonymous

    Hey, thanks for reading. GREAT question by the way. This is how I chose to enter: like you said, there was other signals, but the reason I did not enter on them was because the close of the bullish bar did not exceed the high of the previous bar so I did not trust that it was a true break-out. You will see on the chart above, that I went into the trade after two bullish bars and the second one exceeded the high of the previous bearish bars, thus giving me confidence that it was a good break-out. Does that make sense?

  • Anonymous

    Hey, thanks a lot for the comment. I am also working on adding more criteria to my Bollinger band strategy and would love to see your write up on it. please send it to my email: [email protected]

  • Anonymous

    Hey, first of all, thanks for reading and leaving a comment. This strategy really can be used on any time-frame, but I like to use it on the 4hr and daily. It’s a 20 period set-up, which is normally the default on your platform and the deviation is 2 which should also be default.  I ALWAYS apply indicators to the close. .. I am not sure what you mean by shift. Could you explain that to me?

  • Tigertraderbrett

    Thank you Nathan for sharing with us,You make it easy to understand. Please tell us what settings you use. Regards TigerTrader

  • David

    Hello Nathan. Many thanks for sharing your post. Can you tell me what are the settings for the bollinger bands?

  • Ahmetalim2000

    Hi Nathan,
    Thanks for your post.
    Want to clarify some points if you dont mind ;
    – is there any special setting for the BB or def (20,2) ?
    – on picture you posted, just before the bar you entered and after the tails there is also one signal to enter ( 2 bars closed ) but they result with the SL. and after this the second opportunity that you entered come. Can you advice how to choose the right one ?

  • Zoohair Shaio

    I use Bollinger Band same as you do but with confluece with CCI as it is a momentum indicator when the b bands pierce the bottom band and closes outside and then the next candle closes inside and then confirmation of CCI cross the -100 which is an area of over sold area into neutral area, also if it is in the demand zone ( support). This will give me more confirmation of the uptrend. In the reversal to downtrend is the opposite it is when a candle pierce the upper band and closes outside then the confirmation of CCI crossing the 100 over bought (Supply) Zone  with the  resistance at this level then it is high probability for a downturn.
    I have a detailed write up on this if you are interested in publishing it.
    Zooahir Shaio

  • wikaniko

    Sounds good, thanks for sharing.
    A few things we all need to know
    Best time frame?
    Bollinger Band settings – What period? What shift? How many deviations? Apply to Close, open, what?
    Pls confirm the settings that you use on your BB’s  and time frame.

  • Anonymous

    Hey, thanks very much for reading. I hope you enjoyed it and will think about adding Bollinger Bands to your strategy.

  • Anonymous

    Hey Marty, my stop loss and target depend on the time-frame and situation. If it is a daily Bollinger set-up like the one I showed in the article, I will set me stop at the low of the previous candle and my target will be just under the opposite band.

  • Marty

     what is your stop loss and profit target? if you can give me the rules, I can back test the strategy and show you the performance report

  • Rblaz18

    Hey, Nathan, thanks for the posting. I look forward to hearing more about how you use the BB’s

  • Anonymous

    Hey, thanks for the comment. Yeah, I agree that adding a MA would help increase the odds of the strategy. What time frames do you make Bollinger entries on?

  • superman0453

    Hi Nathan,
    To improve the odds in the strategy, it works best when the 20SMA of the bb is flat or buy/sell with the move of the MA trend.the entry above I would likely take profit off from the next resistance line as the MA is down unless on a longer term,we havethe trend up.but we already looking at daily chart.just my thoughts.have been studying bb for awhile.