Bollinger Band™ Strategies That Produce Profit

Nov. 13, 2023

Topics and videos about the “best” indicators tend to get a lot of views.

I’ve done some of that myself.

But we’ve had an unexpected, yet fortunate, turn of events this year.

2023 has been a whipsaw quagmire.

Many traders have even said 2023 has been the hardest trading year of their careers.

So, if an indicator tested out well previously and works this year, it will probably work far into the future.

And an indicator that fits that profile is the famous one created by John Bollinger (Bollinger Bands™).

This week, we’re going to look at a few Bollinger Band™ strategies that have good past testing and have held up this year.

First, we’ll discuss Forex.

For a long time, I’ve talked about using the trendiest Fx pair, the GBPJPY, for trend strategies. We’ll do that again.

And I’ve also talked about entering on a Band breakout, not a reversion to the mean. We’ll do that again, too.

Here’s the first system this week. I’ll also be talking about a version of this methodology when I speak at the Trade View Conference in Melbourne in December.

(The guy in the middle looks suspect.)

Here are the details of this simple strategy:

BB GJPY 1-Hour Breakout

• Entry: A break above or below the Bollinger Bands™ (100 Length, 3 standard deviation)
• Target: 450 pips
• Stop: 190 pips

Using the Master Trend robot and trading 1 lot each time, here’s how that strategy has hypothetically done in 2023:

Here’s the Curve:

Now, it isn’t perfect. It’s had some of 2023’s infamous whipsaws.

But it’s hypothetically profitable. And many, many strategies that worked for years are not profitable this year.

So the fact that it’s hypothetically up is a big deal.

Why is this strategy profitable when so many others have not been?

I would say it’s because it only trades extremes and it doesn’t trade much. If you aren’t always in the market, the market can’t punch you in the face very much.

And the signal quality tends to be higher.

If only a trader can go without action for a period of time.

How has this strategy done over time? Here’s the Curve via Portfolio Architect going back to 2004:

The testing shows profit in the past and also in the present. Hooray Bollinger Bands™!

In our next Newsletter, we’ll look at another BB strategy.

Talk soon.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.