Advanced Bollinger Bands

The Advanced Bollinger Bands forex indicator is a more advanced version of John Bollinger’s regular Bollinger Bands indicator. When the market is heading upward, the Bands point to the upside; when the market is trending downward, the Bands point to the downside. For any currency pair, this indicator can be used for scalping, day trading, swing trading, and position trading. This indicator can be completely customized directly from the input tab.

What are the Advanced Bollinger Bands?

The Advanced Bollinger Bands forex and stock trading indicator is a trend-following indicator that assists traders in identifying buy/sell zones. Unlike traditional Bollinger bands, this indicator clearly displays dynamic trendlines alongside overbought/oversold levels. Technically, the indicator indicates both trend continuation and trend reversal. These capabilities enable traders to engage in both trend-following and swing trading at the same time. In addition to forex and stocks, the Advanced Bollinger Bands are appropriate for futures, metals, energy, and cryptocurrency trading.

Setting up the Advanced Bollinger Bands
Setting up the Advanced Bollinger Bands

Advanced Bollinger Bands Strategy

The buy zone is represented by the green bars above the mid-Bollinger bands. The red bars at the bottom of the bands, on the other hand, represent the sell zone. When looking for a trend-following entry, the trader ought to consider if the price intends to stay in the green or red zone of the Bollinger bands. An example could be when the price is originally confined within the red zone, signaling a downtrending market. The price may, however, enter the buy zone but be rejected by sellers from the higher Bollinger bands. Later, the price may break through the mid-band, signaling a sell entry, thinking the market would resume its current bearish rise. While short, we could use the upper Bollinger band as a stop-loss position. We could also keep our sell positions open until the price breaks over the mid-band. Alternatively, if the trade has already earned your desired risk-to-reward ratio, you can decide to exit manually. Consider a bullish breakout at the mid-band during an uptrend market environment when entering long. You could set your stop loss below the lower Bollinger band and stay long until the price enters the selling zone.

Buy Signal

The following could be your checklist for a buy trade:

  • When the bands are pointing upwards.
  • When price is in the red area of the Bollinger bands.

Once these events occur:

  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when price enters the green area.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Advanced Bollinger Bands Buy Setup
Advanced Bollinger Bands Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the bands are pointing downwards.
  • When price is in the green area of the Bollinger bands.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when price enters the red area.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Advanced Bollinger Bands Sell Setup
Advanced Bollinger Bands Sell Setup

Advanced Bollinger Bands Pros & Cons

Pros

  • The Advanced Bollinger Bands assists traders in predicting possible trend reversal zones at dynamic support and resistance levels.
  • The indicator, while predicting overbought and oversold levels, can also be used to take advantage of long trends and enter positions at possible trend continuation zones.

Cons

  • Price breakout on the Advanced Bollinger Bands may not always result in price continuing in that direction.
  • The trader may require some level of price action knowledge to pick trades properly when trend continuations happen.
  • It can be inconveniencing when the indicator obstructs the trader’s view of the candlesticks.

Conclusion

The Advanced Bollinger Bands provide a straightforward illustration of market trend status that is simple to understand and follow. It assists in measuring price volatility levels as well as recognizing market momentums and trend situations. In addition to anticipating buy/sell positions, it specifies prospective stop-loss and take-profit places.