Hey now. I'm back with another exclusive trading system that has been proven
extremely profitable over 100 consecutive trades. And by the end of this video you
will know how to trade Bollinger Bands better than John Bollinger himself.
Just be sure to stick around to the end where I show you how we can make this
even better. And all you have to do is slap that subscribe button like mama wakes up son.
I call this system Bollinger On the Trend,
and like most trading systems it can be adapted to forex, crypto, option, stocks,
indices, or any instrument that has significant volume and market participants.
This strategy uses three free TradingView indicators. As always links and settings
to all indicators are listed in the description.
The first indicator is the Relative Strength Index or RSI. I'm going to keep all inputs at default
so you can see it better. I am going to remove the background and color it
in yellow. This oscillator will provide us with confirmation of trend continuation.
The second free TradingView indicator is the 200-period Exponential Moving Average. I'm
going to color it in white. The 200 EMA will be used for our trend direction confirmation.
The third and final indicator are Bollinger Bands I'm going to keep the inputs at default
and just make the lines thicker so you can see it more clearly. Most people use Bollinger Bands the
wrong way in my opinion. You are about to see how a trend trader uses them to great effect.
This study is going to provide us with our trigger for entries and stop loss levels.
Let's go over entry criteria and review some examples. As always system rules and
details are listed in the description below. This chart is Bitcoin versus the US Dollar,
15-minute candles. The rules to enter along using the Bollinger on the Trend system are:
First, we must have price above the 200 Exponential Moving Average in white.
Second, we are looking for hidden bullish divergence on the Relative Strength Index.
Here we have a higher low on price and a lower low on the RSI. Finally we want to see
a close above the Bollinger Band Basis Line in orange. All of that happens on this candle here
that is our trigger candle. We place our stop at the bottom of the Bollinger Band
in blue and target one to one for the first half of our position. When one to one is hit we move
our stop to break even and target two to one for the remainder of our position. And the second half
of this one stops out at breakeven. If you enjoy this content make sure to click that like button.
We have one more long example. Price is above the 200 EMA we have bullish hidden divergence.
A higher low on price and a lower low on the RSI. Finally, we get a candle to close
above the Basis Line in orange. This is our trigger. We target one to one for the first
half of our position. When one to one is hit we move our stop to break even and target
two to one for the remainder. And this one crushes two to one. Now we flip to shorts.
This is what I will test for shorts. First price must be below the 200 Exponential Moving Average.
Second, we must have hidden bearish divergence on the Relative Strength Index.
So you can see where we have a lower high on price and a higher high on the RSI. Third,
price must close below the Bollinger Band Basis Line in orange. All of that happens
on this candle here. This is our trigger. We place our stop at the upper Bollinger Band
in blue and target one to one for half our total position. When one to one is hit we move our stop
to break even and then target two to one for the remainder. And this one stops out at break even.
I'm going to show you one more quick short example. Price is below the 200 EMA. We have
hidden bearish divergence on the RSI. A lower higher price and a higher high on the RSI.
And then we have a close below the Bollinger Band Basis line in orange. This is our trigger candle.
We target one to one for the first half of our position. When target one is hit
we move the stop to break even. And this one hits our two to one,
second target. I'm going to give you some ideas on how we can make the system even better
along with a Trader's Landing Score. And now it's time to do what I do.
If you enjoy this content please hit that like button. Remember this is
just 100 tests on one instrument, if you are thinking of using the system please
do all the required testing and be sure to let our community know what you discover.
This test was done on Bitcoin versus the US Dollar 15-minute candles. it took about seven months to
find the 100 setups. 63 hit target 1 and 42 hit target 2, which is really, really good. Most wins
in a row were 8 and most losses in a row was 5. We ended up with a 63% winning percentage with a 53%
gain on account risking 1% per trade. Risking 2% per trade would have yielded
over 100 percent in gross profits. But stay tuned because this system has a big caveat.
The equity curve here is really just amazing, A solid consistent impulsive move up. But
there is a reason for this and it can make the results look somewhat misleading. Look at this
12-hour chart of Bitcoin. You can see there are basically three major impulsive trends.
With all of these trends many indicators and many trading systems used on the lower time
frames would have produced similar results. But more on that shortly.
What score would you give this strategy? Let me know in the comments below. I give
the system a Trader's Landing score of 7. Because while the results are great much
of that may be a function of overall higher trend impulsiveness. However,
in the right circumstances, this actually could be a nine.
Remember the enemy of great is good. I have four ideas on how we can improve this system. First,
when you have a multiple take profit system and you see that over fifty
percent of the setups hit your target two, this is an indication that you may want to
forget about target 1. You could simply move the stop to break even at 1 to 1,
and then let the entire trade hit target 2. A vast majority of the time this will greatly
improve your overall gain on account while maintaining the same win rate.
The second optimization tip is not for this system, but what can we take away from this
strategy and add to another. Those who have watched my videos know I like to use the ATR to
set my stop loss. In this video which featured Explode on the Double D that proved to have
wonderful results. But the Bollinger Bands can also be used as an effective stop loss
level. I am not a big Bollinger Band advocate but in the right spot it is a great indicator.
The third optimization idea is a big warning. Look at this chart, this line here is where the
100 test began, and the test ended a couple of weeks ago. So we are examining the most recent
data set. What if you traded between these lines here? Do you think during this consolidation the
system would have done nearly as well? It doesn't. How do I know? Because during this consolidation I
actually tested this exact system and it was not even profitable. So don't think because
some guy on YouTube gets these amazing results you are going to start trading live and retire.
You must do extensive back tests, and if you are watching this far I am sure that you do.
The fourth tip is really the most obvious. When you look at the whole picture just trade pairs
that are on huge higher time frame trends and this thing will make you money. Like this chart,
or this one, or this one. And the reason why is this system does a great job in
getting you into current trends. Check out this playlist for more profitable systems,
and have a great day. Because you deserve it.