Double Bollinger Bands Investment Strategy

In this article we are going to explain a trading technique called Double Bollinger which is basically a recent development whose general idea I found interesting. It is based on the use of the Bollinger Bands indicator.
It employs two time frames, a higher one for filtering trades and a lower one for inputs. In this case, the author recommends using a 1-hour frame in conjunction with a 15-minute frame. Likewise, it is best to avoid periods when important news is announced and the period between the end of the New York session and the opening of the Asian session.
As with any trading system, it is recommended to first evaluate it on a demo account.

System indicators

- Main window (1 hour time frame):

Candles or bars chart.
Bollinger bands with standard configuration (20, 2).
EMA of 55 periods at the close.
Any indicator that signals important support/resistance. If such an indicator is not available, the trader can place the lines on his own.
A news alert or any service that allows you to be aware of important market news.

- Secondary window:

RSI of 8 periods.
EMA of 8 periods applied to the closing on the data of the first indicator.
Bollinger Bands (20, 2) applied to the data of the first indicator.

Additional Indicators:

Divergences between the price and the RSI (We can change the chart type to linear for a better visualization).
Expansion contraction of Bollinger bands.

System rules

Trend identification
The trend is identified by the 55 EMA (main window) and the 8 EMA (secondary window). When the price is above the 55 EMA this suggests an uptrend. Likewise, when the 8 EMA is above the 50 level of the RSI this indicates an uptrend.
The opposite applies for negative trends. Trend lines (on price, RSI and the 8 EMA) can also be applied in conjunction with higher highs (uptrends) or lower lows concepts.
This system provides 4 types of trading signals which are described below:

Trade A: In an uptrend, price returns to the 20-period moving average of the Bollinger Bands (main window) and price action suggests indecision. At the same time the 20-period moving average is rising. The RSI crosses above the 8 EMA and the price action suggests that the main trend is going to continue in the same direction up. The stop loss is placed below the last support level. The take profit is placed below the next resistance level. If the relationship between return and risk is positive, we open a buy position.
Trade B: In an uptrend, the RSI is in an overbought condition. After a strong bullish wave, the price is above the upper Bollinger band. Price action is near or at a resistance level, which suggests a possible correction. At the same time, the RSI crosses below the 8 EMA. If the relationship between return and risk is positive, we open a short position.
Trade C: After making a move higher from below, the price begins to consolidate near the 20-period moving average of the Bollinger Bands, and the price action suggests that it will continue to move higher until it reaches the upper Bollinger Band. The RSI crosses above the 8 EMA and the upper Bollinger band in the secondary window. If the relationship between return and risk is positive, we open a buy position.
Trade D: Bollinger bands are tight and candlesticks are small, indicating a period of low volatility. Then the price makes a strong move (large candlestick) and breaks the Bollinger band (upper window). At the same time, the 20-period moving average is inclined to follow this movement. The Bollinger bands of the upper window and the lower window expand. The RSI is crossing above the 8 EMA and the upper Bollinger band. If the relationship between return and risk is positive, we open a buy position.

Usually the signals for Transaction A and Transaction D are the best. Transaction B can also produce good results. In the case of Transaction C it is risky, but it can still be profitable if good money management is applied.
Transaction A&D > Transaction B > Transaction C
Regarding money management, each trader must set their limits regarding the amount they want to risk in each transaction based on the total capital in their account. Regarding the management of open positions, we must respect the stop loss at all times. If the market moves in our favor, we can close the position at the nearest support/resistance or use trailing stops.
You can download the template and indicators developed to apply this strategy in Metatrader 4, through the following link:
Double Bollinger trading system template and indicators

Forex System Example Chart

https://preview.redd.it/7fz65lq5pnh91.png?width=625&format=png&auto=webp&s=f54ca80923c740459007177864a2c3ba40ad8a50
In the previous image we see 3 examples of trading signals generated with this system. Signals 1 and 2 are examples of Transaction A . In both cases the signals produced winning trades that generated a nice profit.
On the third signal, an example of Trade C, a position should not have been opened as there were resistance levels between the entry point and the take profit target, so the price started to fall. As we indicated above, Transaction C is the riskiest.

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