Double Bollinger Rubber Band | Forex Factory

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Double Bollinger Rubber Band

  • #1
  • First Post: Edited 5:40am Jun 27, 2018 5:10am | Edited 5:40am
Here is a trading idea based off extreme movements away from bollinger bands. Tge name comes from the fact that price tends to snap back to the mean just like a rubber band being stretched

I have looked at it only on GJ and GU.

Setup: On a 1 hour GJ chart, add bollinger bands (14) with deviation of 1 (red) and again with deviation of 2 (navy), both set to the close.

Sell signal: Price crosses the uppermost navy BB Once it has moved 20 pips away from the BB, enter at market. Stop placed 20 pips above the sell. Exit when price touches the upper red BB.

Buy signal: Price crosses the lower navy BB. Once it has moved 20 pips away from the BB, enter at market. Stop placed 20 pips below the buy. Exit when price touches the lower red BB.

This appears to work quite well when price is trending and spikes out of its range and upon the first breakout following a BB sqeeze (ie when the BB have narrowed then expand as price explosively moves signalling a trend).

Avoid when price is trending strongly in either direction (hugging the navy BBs making successive highs/lows.
Attached Image (click to enlarge)
Click to Enlarge Name: BB example 1.JPG Size: 120 KB
  • #2
  • Jun 27, 2018 5:11am Jun 27, 2018 5:11am
Example of price breakout immediately following a BB squeeze
Attached Image (click to enlarge)
Click to Enlarge Name: BB post squeeze.JPG Size: 63 KB
  • #3
  • Jun 27, 2018 5:12am Jun 27, 2018 5:12am
Example of extreme price movement and fast reversal back to the mean when price has been ranging
Attached Image (click to enlarge)
Click to Enlarge Name: BB ranging.JPG Size: 70 KB
  • #4
  • Jun 27, 2018 5:28am Jun 27, 2018 5:28am
here's an example where there was a potential trade following a BB squeeze, but then as price trended downwards, it moved far beyond the initial BB cross
Attached Image (click to enlarge)
Click to Enlarge Name: BB trending.JPG Size: 106 KB
  • #5
  • Jun 27, 2018 5:57am Jun 27, 2018 5:57am
Some variations/filters could be to use a larger pip distance of 30 pips ibstead of 20 and take profit set to x amount of pips such as 10, 20 pips
  • #6
  • Jun 27, 2018 10:22am Jun 27, 2018 10:22am
Good idea.

But here is my input.

Try regular inputs of BB 20 moving average

When BB squeezes than when the top bb and bottom bb expand in different direction this usually means trend start and momentum. So just price going 20 pips out of BB might not be good enough as the price may never comeback in trends . I circled an example of this.
Attached Image (click to enlarge)
Click to Enlarge Name: EURNZD_H1.png Size: 72 KB
  • #7
  • Jun 27, 2018 10:36am Jun 27, 2018 10:36am
Quoting HarryPlopper
here's an example where there was a potential trade following a BB squeeze, but then as price trended downwards, it moved far beyond the initial BB cross {image}
Dear HarryPlopper,
Nice strategy you have here and many thanks for sharing. So in the case where it went beyond 120 pips it hit the 20 pip SL? Trending is what will really take down your profits as this strategy would be ideal for a ranging or "in steady range" market. Hard part is to find out how to not enter on those trades that will smash right through your SL. I am currently playing around with envelopes, with a similar issue, but not ready to share until I have found a solution to filter out these trending trades.

Maybe you can establish an acceptable range for BB, like if the distance is more narrow than X or wider than Y you do not open a position. Since tight consolidation will cause a greater narrowing of the bands, maybe it can be avoided that way??

Kind Regards,
Tzamo
"Work hard, put in the effort, and follow your dreams..." -Me
  • #8
  • Jun 27, 2018 10:45am Jun 27, 2018 10:45am
I just did a quick manual backtest

GBPJPY from january 19 2017 to march 19 2017

40,15,10,20,-20,-20,-3,30,38,-20,27,-20,20,-20,-20,20,30,-20,-20,19,46,-20,-20,-20,34,-20,17,16,-20,28,32,22,30,30,26,27,-20,-5,-20,12,33,-20,28,36


280 pips total

26 wins
18 losses.
  • #9
  • Jun 27, 2018 10:48am Jun 27, 2018 10:48am
Here is the oma ally bbma template. This better identifys the extreme positions imo.

When the red 5lnw ma high goes above top bb it is considered extreme sell

when the blue 5lnw ma low goes below bottom bb it is considered extreme buy.

The light blue color is 50 ema this set the trend

You gotta look to buy reentry above 50 ema and look to sell reentries below 50 ema

Reentry means rejection of the 5 and 10 lnw ma, mid bb 50 ema
if the price rejects all at same time it is a stronger reentry.

The circles show extremes

usually 3 extremes could mean 3 tops(head and shoulders) reversals
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSD_H1.png Size: 103 KB
Attached File(s)
File Type: tpl BBMAszary.tpl   3 KB | 600 downloads
  • #10
  • Jun 27, 2018 10:55am Jun 27, 2018 10:55am
Quoting hibra68
Good idea. But here is my input. Try regular inputs of BB 20 moving average When BB squeezes than when the top bb and bottom bb expand in different direction this usually means trend start and momentum. So just price going 20 pips out of BB might not be good enough as the price may never comeback in trends . I circled an example of this. {image}
20 period is the most popular and by default. But is this best for all currency pairs? I find BB 17 best for eur/usd, what is your opinion and did you find better settings for other pairs?
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  • #11
  • Jun 27, 2018 10:58am Jun 27, 2018 10:58am
Quoting michaellobry
{quote} 20 period is the most popular and by default. But is this best for all currency pairs? I find BB 17 best for eur/usd, what is your opinion and did you find better settings for other pairs?
I didnt do a particular research but oma ally system uses 20 period with success.
  • #12
  • Jun 27, 2018 11:02am Jun 27, 2018 11:02am
Quoting tzamo
{quote} Dear HarryPlopper, Nice strategy you have here and many thanks for sharing. So in the case where it went beyond 120 pips it hit the 20 pip SL? Trending is what will really take down your profits as this strategy would be ideal for a ranging or "in steady range" market. Hard part is to find out how to not enter on those trades that will smash right through your SL. I am currently playing around with envelopes, with a similar issue, but not ready to share until I have found a solution to filter out these trending trades. Maybe you can establish...
You can try combining multibands, 2 bollinger bands with different ATR (or stdDev), one bollinger band with 1 keltner band, customized BB (upperband AND lowerband) around another BB line (but only either upperband or lowerband). The latter method I"m using in my current trades, see printscreen.

Happy pipping!
Attached Image (click to enlarge)
Click to Enlarge Name: bb multi upper.png Size: 132 KB
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  • #13
  • Jun 27, 2018 11:03am Jun 27, 2018 11:03am
Just as a reminder when I mentioned "extreme" before I meant 5 linear weighted ma high going out of top bb and 5 linear weighted ma low going out of bottom bb

not price closing out of top or bottom bb.

important ma goes out
  • #14
  • Jun 27, 2018 11:04am Jun 27, 2018 11:04am
Quoting michaellobry
{quote} You can try combining multibands, 2 bollinger bands with different ATR (or stdDev), one bollinger band with 1 keltner band, customized BB (upperband AND lowerband) around another BB line (but only either upperband or lowerband). The latter method I"m using in my current trades, see printscreen. Happy pipping! {image}
I think just keep it simple. Too many bb. imo

I will try to come up with something
  • #15
  • Jun 27, 2018 11:06am Jun 27, 2018 11:06am
This was posted by me on the other thread. So I will pursue this here.

Hi I dont want to distract too much from the thread but since you introduced BB. Some people are having great success at identifying what they call "EXTREME" situation in BB. I wont go too much into it as that thread was moved to commercial and it involves a lot more than just the "extreme". I just wanted to infuse it into your system with my variation.

indicators: Bollinger Bands/ standard inputs.
Moving average/ 5 linear weigheted applied to high and 5 linear weighted applied to low.

Same rules as yours Harry with a little difference:

This is for sells, just reverse for buys.

1: wait for 5 lw moving average high to go out of the top BB. (this is referred to as "extreme" meaning the price is at an extreme so there is possibility of reverse in market)
2: we wait for a bullish candle to close and than a bearish candle to close with its high higher than the last 5 candles.(this is per your rules but I will add one more filter)
3: now we wait for the next candle(the 3rd candle) to close. The 3rd candle must be a bearish candle as well and its high must be lower than the previous bearish candles high. Preferrably much lower.
4: we go short at the open of the 4th candle, Our sl is at the high of the 2nd(bearish) candle.
Our take profits:

1: 1 to 1 RR
2: 1 to 2 RR
3: tp at the touch of 5 lw moving average low.
4: tp at the touch of mid BB
5: trail your sl as you wish.

P.S. If you want to be picky add another filter: The second bar(the bearish signal bar) must have more than 50% of its body above top BB.
By adding this extra filter I think we can take trades where the signal bar could be a bullish candle as well not only bearish(this is for sells)
Attached Image (click to enlarge)
https://www.forexfactory.com/attachm...1&d=1530066765
  • #16
  • Jun 27, 2018 11:13am Jun 27, 2018 11:13am
@harry:
Upon improving your strategy try reading this BB pdf. Do you see anything interesting?
Attached File(s)
File Type: rar Bollinger Band aspects to improve your BB strategy.rar   261 KB | 924 downloads
File Type: pdf Bollinger On Bollinger Bands.pdf   256 KB | 4,706 downloads
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  • #17
  • Jun 27, 2018 11:16am Jun 27, 2018 11:16am
Quoting hibra68
{quote} I think just keep it simple. Too many bb. imo I will try to come up with something
"too many bb"
I agree, it looks messy although it's only two bb's (not more than that), where you find confluence off each other. Same number as Harry (see Harry's first post).
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  • #18
  • Jun 27, 2018 1:38pm Jun 27, 2018 1:38pm
I'm trying to help improve your Bollinger Band strategy when I read this:

"This adaptive version applies the concept described by John Ehlers in the book Rocket Science for traders, for making standard indicators adaptive . The indicator uses the homodyne descriminator to compute the dominant cycle. To apply the homodyne descriminator, real and imaginary parts have to be calculated from the Inphase and Quadrature components. (Inphase and Quadrature components are deduced using the Hilbert transform. To learn more about this, read the article on Advanced adaptive Indicators theory and implementation. The sections on Complex numbers and phasors for measuring market cycles and also Measuring cycle period. )." - https://www.mql5.com/en/market/product/9535#description

Can anyone explain what this means in simple terms?
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  • #19
  • Jun 27, 2018 7:38pm Jun 27, 2018 7:38pm
Quoting hibra68
Good idea. But here is my input. Try regular inputs of BB 20 moving average When BB squeezes than when the top bb and bottom bb expand in different direction this usually means trend start and momentum. So just price going 20 pips out of BB might not be good enough as the price may never comeback in trends . I circled an example of this.
thanks hibra68, what I've found is that when a BB squeeze is on and price first breaks out, it breaks hard in the opposite direction of the imminent trend then snaps back. I've always used 14 as my default MA but anyone is welcome to experiemnt with whatever BB Ma setting they wish.
  • #20
  • Jun 27, 2018 7:46pm Jun 27, 2018 7:46pm
Quoting tzamo
{quote} Dear HarryPlopper, Nice strategy you have here and many thanks for sharing. So in the case where it went beyond 120 pips it hit the 20 pip SL? Trending is what will really take down your profits as this strategy would be ideal for a ranging or "in steady range" market. Hard part is to find out how to not enter on those trades that will smash right through your SL. I am currently playing around with envelopes, with a similar issue, but not ready to share until I have found a solution to filter out these trending trades. Maybe you can establish...
Thanks Tzamo. Yes, I agree, this seems to work best in ranging conditions. In the 120 example, the SL would have been hit, so best to avoid when the market is trending strongly in one direction. Thanks for the tip about finding an acceptable range. Another could be to look for horizontal bands and that price has moved away from the opposite band within the last x amount of bars, say 12 for example.
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