With there being millions of retail traders in the world, I have to believe there are a few that are crushing the market using Bollinger Bands. Afterwards, the price starts to decline. March 4, at January 11, at 6: Dear Chris, This is a good news for me too as I have to wake up 3.
Whenever you locate a long trade setup, compare it to the left trade setup on the below screenshot and take it if they look similar. Here is what I call a bad long trade setup below. It is still a trade setup, but it is not a good one. Candlesticks 1 and 2 are closed almost below Bollinger Middle Band which means bears are still strong.
It goes up only for 2 small candlesticks and then it goes down strongly. It means this candlestick made the market a little overbought and so a bearish counter-attack was possible:. It is the same with short trade setups. Everything I explained about long trade setups has to be considered for short trade setups too. Just the direction is opposite. Here is a good and typical short trade setup. As you see, candlesticks 1 and 2 closed above BB1 Lower Band.
With the first one at the left, candlestick 1 is closed with a long lower shadow above Bollinger Middle Band. It means bulls still have the control. Here is another bad short trade setup below. Candlesticks 1 and 2 are closed right below Bollinger Middle Band. Besides, one of them is bearish and the other one bullish.
They have long lower shadows too. These are all the signals indicating the bulls strength:. Going against strong trends has a higher risk, even when the trade setup is too strong.
It is recommended to avoid the DBB trade setups when they are against the trends. Conversely, agreeable trade setups usually have much better results:. Technical analysis always help you take the setups with more confidence. A DBB short trade setup formed after a support breakout, or a support breakout formed after a DBB short trade setup are much better to take, both for DBB and breakout traders:.
At least, you can consider the three candlesticks close prices with more caution, and differentiate the good and bad setups from each other. It helps you have a much higher success rate. You are indeed an instructor. You are carrying us on your wings like the mother eagle. Checking on us every now and then to see how we are progressing and also straightening us. Boy I needed this article so badly. Great article once again and helps to give a better idea of how to utilise the double Bollinger band strategy.
Thank you for writing this article and please keep on giving us many examples and showing us also the bad setups and what not to do! Hi Chris, thank you for these very clearly described DBB fine tuning techniques.
Regarding the long DBB trade that you thought most promising July , , the daily movements are quite close together up to and including the buy point 3. What is the best way to identify the more risky and less risky stop loss positions? Say, 10 pips below the lowest point of the 1 candlestick?
All we can do is that we take the best setups. Although the left setup went down, but majority of the setups that have the same condition work much better. Dear chris I sent you the 5th version of LuckScout indicator. I added this article points to indicator for calculating DDB setups. I have a question too. It definitely clears up why people are getting stopped out on this system.
Good day Chris, Since you introduced this system of trading, I have been using it and have been successful with it. I will continue to follow this system and try to learn the technical analysis, and as you taught us, I like keeping it simple. Hi Chris Many thanks to you for devoting some time to teach LuckScout followers even in the weekend. I would like to ask, there is a short trade setup formed on the very first picture where are the good long trade setups shown.
The candlestick 1 is exactly on the 15th July and 3 is that long bearish candlestick. Would you consider this setup as a short trade setup that time?
Thank you for everything you do here. I go out early or late and I do not really have a good feeling what to look at like with entry, where I feel more confident due to your many advises. There is some error type in article: Hi chris Please fix the error type in article: Should be Candlestick 1 …. This one is correct. It says that candlestick 3 did not form a DBB short setup which is correct.
Hi Chris, your sharing must be appreciated! I notice that you are a commercial member on factory. Does it mean that you have to pay for posting on FF? It is also noticeable that this site contains pure knowledge, no selling or anything relevant with generating money through website. That is, FF should not charge you anything!
So I am kind of curious about what kind of business you are engaging with FF. If you are a mutual fund manager, do you accept clients, like me, through web? We are just a commercial member and have no other relationship with FF. You can see my reasons here: Hi Chris, Thanks for the wonderful sharing of knowledge and many I as I can see from the posts are counting their lucky stars for stumbling upon your website.
Many many thanks to you Sir Chris and Kamel you made our trdaing more easier, simpler and profitable! Yes first of all, I Was confused about using DBB but now I again try to learn properly, I think DBB work 50 percent and candlestick pattern work 50 percent, then both can give us percent result.
I prefer the analytical system which is candlesticks patterns combined with Bollinger Bands breakout. It depends more on what kind of trader you are. Are you willing to wait purely on strong setup for bollinger bands with candlesticks? If you have missed previous setups, you might need to wait weeks or even months for the next.
Sometimes a setup causes the range to be broken. Sometimes a market ranges for a long time, and trade setups return weak results. Your trading teaching methodology is simply extraordinary. Thank you so much for sharing your wisdom with us! Is the 1 candle problematic? Does it close too close to the middle band? Is the fact that it opens below the middle band a problem?
It is not a bad setup. Candlesticks 1 and 2 are both bullish and 2 is closed in a good place. It is a good setup indeed.
And there are no other opportunities for entry for a long time after that, so most of the trend is unfortunately missed. Is there any way to avoid this? It would hit the stop loss if the stop loss was set at the middle of candlestick 1, but it would not if stop loss was set above the high price of candlestick 1. I see, but why would you set SL above the high of candle 1?
I thought the rule was to put it at the high price of candle 3. Although i can see how that is a problem if candle 3 is very small SL would be too tight. Does that mean we have some freedom in placing the SL? I did read in the original article that SL can be made smaller if candle 3 is very large. So is the opposite true as well? There is no special rule to set the stop loss and target orders. We set them where experience tells us that it is a good place.
Above the high price of candlestick that forms the signal is the best place. That statement seems to contradict the whole idea of a mechanical system, which should be entirely based on rules.
There is no special technical and scientific rule for stop loss. We just decided to place it where it looks better according to our experiences. Of course there is one general rule that says the stop loss has to be placed at the level that it gets hit only when we have chosen a completely wrong direction for our position.
Yesterday I analysed a whole bunch of charts of the past two years after reading the first article on DBB.
This gives me a little bit more confidence that I am starting to understand the system properly! Thanks a lot for all you guys do here to help us novices and especially for your focus on keeping things simple — there is no lack of resources on the Internet if one wants to dive into the full complicatedness of it all, but LuckScout is unparalleled in keeping it simple and easy to understand! So that I can follow reversal and continuation signals at the same time? Thanks in advance for your help.
You can have each system on two different profiles on MT4 and load each profile whenever you want to locate a setup through each system. These two systems have nothing to do with each other. So you have to trade them completely independent from each other. It all seems so clear now. You keep us from making the same mistakes time and again. What do you think of using HeikenAshi candles for this strategy, or does it give too many false readings? There is no precise answer to these questions.
DBB is a mechanical system and a trade setup can be the beginning of a small movement or a strong trend. Will have to make my own deductions then, depending on the setup! Thank you for your answer Chris. Yes, it is in comparison to the other MAs. Market reacts to 20sma more than the other moving averages. I am truly amazed like other members with the way you explain everything. Using the same old basics you always teach us like Bullish or bearish pressure,considering the trend, and technical analysis in DBB, makes this strategy a real respectful one.
Sorry to give a differing opinion from the cult like replies here, from people who have had one trade go their way, BUT from my back testing this system will lose you money. Initially you said that this is a mechanical system. Trade it mechanically and you will lose money. If such a system were possible the banks would just set up computers to trade your system mechanically, investing billions of dollars into it.
There would be no reason to raise money with loans anymore. You have an audience of newbies that believe anything. Your claim that you can increase profits by only taking certain trades, also does not make the system any more profitable. Even the guy that supposedly discovered this golden goose is no where to be seen anymore. This system is a dud and will lose you money. This system cannot be profitable all the time. However, it is introduced here just because many traders like to know about this so called double BB system.
I have recently come back to this system and found it provides excellent entries. As with any technical indicator, the key question is: As always, when an indicator sends a signal, we seek some kind of confirmation before trading.
Just like traders need confirming signals to avoid getting fooled by temporary, false breakouts beyond support or resistance, so too here we need ways to distinguish between false trend changes and real ones, between short-lived and sustained moves into different zones that could last long enough for a profitable trade.
You may simply apply the same criteria that you use to confirm breakouts beyond support or resistance for the given asset and time-frame. You may find from experience that you need to adjust those criteria to confirm moves between DBB zones.
The balance that works for you will depend on both the volatility of the asset, your personal risk tolerance, and other risk and money management safeguards you already have in place that determine the damage you suffer from a given loss.
For extensive details on risk and money management, as well as examples of how we apply these tools in actual trades, see Chapters 5 and 7 of The Sensible Guide To Forex. In sum, DBBs help us decide when we should be trading a trend, a trading range, or refraining from trading.
The most popular financial portals like Yahoo Finance and the like typically only allow a single set of Bollinger bands. I did a quick search and only found 2 forex content sites that offer free charts that allow you to insert multiple sets of double Bollinger bands at whatever settings you choose. Ok, that was the background. Proceed to Part 2 for the 4 rules of using DBBs and examples of how we apply them.
Those seeking just a brief summary will find one in Part 3 coming in days — just the basic rules and a chart illustration. You are commenting using your WordPress. You are commenting using your Twitter account. You are commenting using your Facebook account.
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