Double Bollinger Bands Strategy is a mechanical trading strategy. It is either black or white. It means either a trade setup is formed which means you should enter the market, or there is no trade setup at all. Such a mechanical trading system is good for those who have no patience and knowledge for analyzing the markets and locating the trade setups based on the technical analysis or candlestick signals.
It just tells them to enter a market or stay out. This is what you have to note if you want to use such trading systems.
The reason I am sharing this system here is that some people always ask about it. This system has been introduced to Forex traders as an ultimate trading system that makes money for them consistently. I just want to clarify that it is not the Holy Grail, and because it is mechanical, it can generate consecutive losses sometimes.
You just check the daily charts for few minutes per day, if there is any trade setups based on this system, you take the positions, set the stop loss and target orders, and come back the next day.
In most cases it means more losses. There is either a trade setup on the chart, so you take your position, or there is no trade setup, and so you check the chart the next day. It is not like that at all. There are only two conditions: All you have to do is adding two sets of Bollinger Bands indicator. The first one is set to 2 and the second one is set to 1. That is all you have to have on your charts. After adding the BB indicators, your chart should look like this:. The outer BB has the default settings and its deviations is set to 2.
The Bollinger Middle Band will be the same, because deviations settings has nothing to do with it. We only use it to hold the positions to maximize our profit, but it has no role in forming the trade setups and taking the positions. Double Bollinger Bands Trading Strategy is good for trading the trending, as well as the ranging and sideways markets. To go long to buy , you have to wait for one of the candlesticks to close above the BB1 upper band.
If so, you have a long trade setup buy signal. Please see the below chart. As you see, candlestick 3 is closed above BB1 upper band, and at the same time the two previous candlesticks 1 and 2 are closed right below BB1 upper band. This is a long trade setup. It means you should buy at close of candlestick Stop loss has to be set at the low price of the candlestick which has pierced the BB1 upper band I mean candlestick 3 , and the target can be at least twice of the stop loss size 2 x SL.
You can move the stop loss to breakeven if the price moves according to the trade setup for 1 x SL. For example, when your stop loss is 60 pips, then you can move the stop loss to breakeven if the price goes up for 60 pips. Sometimes, candlestick 3 not only breaks above the BB1 upper band, but also reaches the BB2 upper band too. This happens when the security is trending strongly:. When candlestick 3 is too long, you can set the stop loss higher than its low price, not to have a too wide stop loss.
Candlestick 3 on the below chart has closed below BB1 lower band while candlesticks 1 and 2 have closed above it. This is a short trade setup. Like the long trade setups, the stop loss has to be set at the high price of candlestick 3, and target can be at least twice of the stop loss size 2 x SL. You can move the stop loss to breakeven if the price goes down for 1 x SL. As I explained above, this trading system is good in catching the trends.
When there is a strong trade setup, you can also take two positions with the same stop loss, when there is a trade setup based on the Double Bollinger Bands trading system. Set a 2 x SL target for the first position, and no target for the second one. In case of a long position, hold the second position as long as the candlesticks form between the BB1 and BB2 upper bands, or above the Bollinger Middle Band. Close the second position when candlesticks start crossing the BB1 upper bands, or when one of the candlesticks breaks below the Bollinger Middle Band:.
It means you should not expect to make hundreds of pips from each trade setup. You can trail the stop loss if you like. Double Bollinger Bands Trading Strategy works on all time frames, but I use it on the daily and longer time frames, because it is easier, safer and more profitable.
Never think that you will make more profit if you apply this trading system on 5min or 15min charts. Trading the shorter time frames is nothing but headache, and you will not make more profit. I spend about minutes checking the charts every day, but I am more profitable than day traders who sit at the computer for several hours per day, every day.
Hi Kamel, your strategy looks great, I like that I can use it with Chris strategy together. Hi Kamel, I read your article again, and I would like to ask you one question, are there any specific rules for ranging and sideways markets?
I love articles along with Chris ones. Whole trading system in one page with easy words…. Very much helpful for beginner like me. I will increase my investment using this strategy. Will start following this strategy from the beginning of next week. Thank you Kamel, looks interesting and simple. Is there no use for the BB2 middle band in this strategy?
You can start from here: I have used this with great results. I do add a third BB with a deviation of 3. It acts as a very strong support and resistance levels. Hi Kamel thanks for a great article as always. I do have one question though: In an uptrend, if your 3 candle closes above the BB1 and the 1 and 2 candles closed below the BMB, will it affect the trade setup?
Hi Kamel very good to see you back. Hi Kamel, Many thanks to you for sharing your simple trading system, God bless you all, just a question …. All pairs listed here: Kamel — would you please look at the candle EURUSD for — if this were traded, and it seems to comply with the system — except that candle 1 closed below the BMB , then it would be stopped out — would you please advise what you would do?
I think the candlestick date should be different that what you mentioned. Please check and let me know. Hi Kamel Thanks for your attention — you are right — I had both the date and pair wrong — it was the candle on the USDJPY daily chart — thank you for looking at this. OR would this revert to a possible BMB continuation entry condition? It is a very interesting group of candles — in view of the rules. If you mean Compare this with To Kamel and Chris, please stay alive guys, we need you here.
God bless you with this an eye opening and the regards you have for Chris! For giving such a huge strategy free without taking a dime God will replenish you with wisdom and knowledge like he did to Solomon And to Chris, More grease to your elbow and wishing you the best life can offer We all your fans appreciate you and wish you good health and prosperity Amennnnnnnn I am Timothy from Abeokuta Ogun State Nigeria.
Thanks for the kind sharing. What if there will only be two candlestick before the setup, will that setup still be a valid one? I can work, but experience shows that this system returns the best result the way I explained above. I noticed candlestick on Hence, is this a valid Bearish sell setup? Exactly the same rules have to be applied to the ranging market.
We take the setup, and move the SL to breakeven on time. Then we sit back and watch. Time will tell if we will have a trend, or the price will turn around and stay in the range zone. Thank you for sharing this with us. You guys are awesome people. I am new to these, did a lot of wrong things, hence have not been profitable yet. However, you guys gave me hope and the believe that all is going to be ok. If 1 candel is closing below the MB, 2 candel is closing just below the BB1 in an uptrend.
Hi Kamel, Thank you for sharing his. Hi, Kamel, For learning to identify the setup validity. It should all at UpperBB1. Another pair for learning again. Candlestick closed on Thank you kamel for a very brilliant post.More...