Today, as part of a review of indicator strategies, I will tell you about The Bollinger Squeeze, or TBS for short.
We also found this strategy on one of the Western forums, which is located on the site “ForexFactory”, which is already well known to you. Since the site is in English, we translated this page especially for you and sorted out all the details of this strategy in order to share it with you.
The author of the article described in detail the indicators that a trader needs to work with this trading system, all the nuances of their installation on the chart and use in trading. He also prepared an interesting drawing with an algorithm for finding entry points with a buy or sell position.
The algorithm clearly “spelled out” situations when and what position can be opened, and when it is not necessary to enter the market. This is very useful information, designed by the author as a memo to the trader.
Tools for TS “TBS”
To work with this strategy, a trader needs to install only three indicators on the chart:
1. Bollinger Bands (can be found in the tools built into MT4) with the following settings:
- Deviation – 2;
- Shift – 0;
- Period – 20;
- Prices – “Close”.
2. Bollinger BandWith (or BBWidth – Bollinger Band) is a proprietary tool, it is not included in the standard MT4 toolkit, but you can download it at the end of the article.
Settings for this indicator:
- Period – 20;
- Width Calculation Period – 100;
- Deviation – 2;
- Shift – 0;
- Min Range Percent – 20.
3. Stochastic Oscillator (included in the MT4 toolbox) with the following settings:
- Slowdown – 3;
- % K period – 9;
- Prices – Low / High;
- % D period – 3;
- MA method – “Simple”.
You can install all these instruments on your chart one by one. Or you can download them in the template at the end of the article and install them on the chart in two clicks. To do this, right-click on the background of the working window in MT4, select the “Templates” item in the context menu, and then – the template you need:
All the indicators for the strategy we are considering, but also their parameters that must be taken into account by the trader in the trading process.
Now we will consider the signals that these indicators give. We will also find out on what specific signals a trader can enter with a sell or a buy.
Signals to enter with a buy
Here you must not miss the appearance of only three signals on the chart:
- Price should touch the lower Bollinger Bands;
- The indicator of the “BBWidth” tool should be colored yellow;
- The Stochastic Oscillator curve lies in the Oversold Zone and shows us the readiness to exit this zone, crossing the level-20 upwards.
At the vertical intersection of the Stochastic Oscillator curve, we enter the market by opening a buy trade.
You can see how all three of our signals triggered (they are marked with numbers in blue circles), after which we entered (4) the market by opening a buy position. Then we set Stop Loss and Take Profit.
Setting Stop Loss and Take Profit for purchases:
- Stop Loss is set beyond the local minimum.
- Take Profit, according to the rules of the strategy, is set twice:
- Take Profit_1 for us will take profit as soon as the price reaches the middle line “Bollinger Bands”;
- Take Profit_2 will close our trade when the price reaches the upper Bollinger Bands line.
Sell entry signals
When looking for a sell entry point, we are also looking for three signals from these indicators, but they must be mirror-diametric:
- Price refers to the upper Bollinger Bands;
- “BBWidth” indication is colored yellow;
- The Stochastic Oscillator line is in the Overbought Zone and shows us the readiness to get out of it by crossing the level-80 downwards.
We see that all three signals (blue circles with numbers 1,2,3) have been received and at the intersection of the Stochastic curve with the level -80 we enter (4) with a sell position. Set the Stop Loss and Take Profit levels according to the rules of the strategy.
Setting Stop Loss and Take Profit for Selling
- Stop Loss for the strategy lies behind the local maximum.
- Here we also have Take Profit “in two stages”:
- Take Profit_1 fixes profit when the price reaches the middle line of the “Bollinger Bands”;
- Take Profit_2 will close our position when the price touches the lower line “Bollinger Bands”.
So, we earned from a sell deal:
- Price at the opening of a position = 1.2795
- Take Profit price_1 = 1.2769; profit is (1.2795 – 1.2769) = 26 p.
- Take Profit price_2 = 1.2740; profit is (1.2795 – 1.2740) = 55 p.
It is possible that for someone 55 points is a small profit, but for someone 26 points is good. I can say one thing, the results of trading according to our strategy “Sniper X” are more impressive, even when our students trade according to this system. If you want to get very good trading results in a short period of time, “Sniper X” is exactly the strategy you need now!
I would also like to ask you to write to us in the comments if you have ever worked with the Bollinger Bands tool. Write to us about the results of your trade, we will be very interested, even if it was not a very positive result of the trade.
Today we reviewed the trading conditions and signals of the TS “The Bollinger Squeeze” indicators. Of course, it is difficult for you to judge how profitable this strategy is and whether it suits you. I can say that I tested it for three months under the following conditions:
- Timeframe – H1.
- Currency instrument – GBP / USD.