Bollinger Bands Break out strategy

Bollinger Bands is a technical analysis indicator; it’s the most popular indicator in currency trading stock trading bond trading to scan the market price chart. Jhon Bollinger Design the indicator in 1980. He created so many rules and criteria and trading systems with the Bollinger band. Here I am going to share with you a simple break out trading system with Bollinger band indicator.

At first, you have to know how it works.

Now, look at the Bollinger Bands Parameters its default is to use the 20-period simple moving average. The upper band is then placed 2 standard deviations above the 20 MA and the lower

The band is placed 2 standard deviations below.Basically, the Bollinger band has so many trading strategies. But now we are only looking to predict and measure the volatility. Bollinger bands are excellent in measuring the volatility of the market.

John Bollinger created some rules one of the rules is:

Closes outside the Bollinger Bands are initially continuation signals, not reversal signals.

This rule has been proved for the volatility breakout trading system for many successful traders.

Bollinger Bands parameters setting for the Strategy:

Bollinger band Period: 20
Deviation: 2
Apply to close

When to Buy Upside Breakout?

When price ranging a certain period of time within a range-bound market after then brake out the resistance/supply zone. The upper Bollinger bands Extent out with a breakout candlestick its confirmation to starting volatility in the market. buy when you see a clear fresh breakout in the supply zone with extent upper band. See the image below.

Buy Signal

When to Sell Downside Break out?

When price ranging a certain period of time within a range-bound market after then breaks out the Support/Demand zone. The Lower Bollinger bands Extent out with a breakout candlestick its confirmation to starting volatility in the market. Sell when you see a clear fresh breakout in the Demand zone with extent lower band. See the image below.