Bollinger Money : Summary
Every trader knows what Bollinger Bands are.
It's a technical indicator developped by John bollinger in the 80s.
That indicator consists of 3 lines
- an N-period moving average
- an upper band at K time an N-Period standard deviation above the moving average
- a lower band at K times an N-Period standard deviation below the moving average
This indicator is called Bollinger Money because it's also a 3 lines indicator based on a moving average.
BUT , the big difference is in the calculation of the upper and lower line.
It doesn't use a standard deviation , but it use a money deviation.
That's mean that the indicator automaticaly calculates the difference in $ between the upper/lower line and the moving average.
For that , it uses the tick size and tick price of the underlying instrument.
That means it works only on "Future" instruments !
For exemple the chart below show a bollinger band on 6E with outside lines at 450 $ from middle.
The goal of the indicator is to find over-buy and over-sold signals.
And what is better than money value to exprim over-buy and over-sold...
Bollinger Money : Parameters
First parameter 'Limit Extreme' is the deviation in $ for the upper and lower line.
Period parameter is used to calculate the moving average.
Bollinger Money : How to use it
As explained in the summary , the goal of the indicator is to show over-buy and over-sold zones.
All traders know that when a price is in those two zones , it will come back quickly to the middle line.
The use of the indicator is than to trade in 'counter of trend'.
Of course you need to follow some rules. We show you here a use of the indicator that gives very good results if you follow exactly the rules.
But , as always , you can try your own rules , try other parameters...
Rules
- Trades with at least two contracts
- Wait for a bar that drills through the upper/lower line.(Test the High with Upper line and Low with Lower line. The bars must be green when testing upper and must be red when testing lower)
- Enter on first bar that closed inside the upper/lower Zone.
- Create a stop loss 20 ticks behind.
- Target 1 is reached when price drills through the middle line.
- Use a trailing stop loss that moves on each bar that have a 'reversed' color with the trend.
- Target 2 is reached on an open above the other outside line or touched by stop loss.
Example 1
Example 2
This example is very interresting.
It shows that with a very good trailing stop loss management. The indicator can become a good trend follower indicator.
And you're sure to take the trend at the beginning...
Example 3
No more comments... Just lines to show trades...
In conclusion :
6 trades taken on three different charts. 6 POSITIFS TRADES
Of course , you will have loosing trade too. But the percentage of winning trades is really explosif (when you follow the rules ).
Bollinger Money : Prices
This wonderfull indicator is offered at 99 $
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