Bollinger bands trading system can help us to determine when the market price going to make reversal move, so we can keep and take our profits.
Bollinger bands trading rules
-If the market price breaks above the Bollinger bands, higher band will move up and lower band will move down. If the lower band higher than the previous low band - it means market price is in overbought condition and the previous high represent as a top market price level. After that the market price will move down to make a correction move.
- If the market price breaks below the Bollinger bands, higher bands will move up and lower band will move down. If the higher bands lower than the previous high band - it means market price is in oversold condition and the previous low represent as a low market price level. After that the market price will move up to make a correction move.
- But if the market price can break the top level, then we consider it as a continuous break and market price will climb bullish because the strength is very strong.
With this Bollinger bands trading system we can identify the end of the market price trend, so if the Bollinger bands trading system already showed the end of the market trend we can continue to the next steps
1. Close all trading position in the end of the market trend.
2. Open new trading position in the end of the market trend in the direction against the market trend.
3. Wait for another confirmation about trend continuation, if trend of the market price still continue then we can open new trading position in the direction of the market trend.
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