BollBounce - 4H Swing trading strategy

[Miki256]

A nice system I have been trading for 3 months.. gained me 50% on account so far
It is based mainly on price movement, and the fact that prices like to retrace to trending moving average and bounce from it, creating strong movements.

Last 2 Weeks Results
GBPUSD: +212 pips
EURUSD: +712 pips

Charts
This system works on any charts; I prefer using it on 4H and 1H charts.
Be sure to backtest it before you try it on any other time frame.

Indicators
Only Bollinger(20)

Entry Rules
Entry is made after price bounces from Bollinger's Moving Average, when the Moving Average is trending (pointing up or down).
After price has bounced from MA (Created a bullish candle for long trades or bearish for short), place stop order 1 pip above the candle (for long) or below the candle (for short). Watch examples for clarifications.

Stop Loss is 1 pip below low of the previous bar (for long trades), and 1 pip above high of previous bar + spread (for short trades).

Trailing Stop
This is what this system is all about.
Stop Loss is trailed to 1 pip below lowest low of last 4 bars (for long trades) and to 1 pip above highest high of last 4 bars (for short trades). Exits are done only by the trailing stop.

Money Management
I risk 2% of starting equity on each trade.

That's about it. Example for trades can be found at my blog, I also post weekly results there. Good trading everyone and lots of pips

 

[Taylored001]

Interesting I read John Bollingers book and he actually put me off using them! But you've obviously found a sound way of using them. Although ultimately you're just placing trades on retracement breaks and this can be done just watching price action; its good you've found a methodology of choosing what trades to take or not.

 

[J. Jay]

A nice system I have been trading for 3 months.. gained me 50% on account so far
It is based mainly on price movement, and the fact that prices like to retrace to trending moving average and bounce from it, creating strong movements.

Last 2 Weeks Results
GBPUSD: +212 pips
EURUSD: +712 pips

Charts
This system works on any charts; I prefer using it on 4H and 1H charts.
Be sure to backtest it before you try it on any other time frame.

Indicators
Only Bollinger(20)

Entry Rules
Entry is made after price bounces from Bollinger's Moving Average, when the Moving Average is trending (pointing up or down).
After price has bounced from MA (Created a bullish candle for long trades or bearish for short), place stop order 1 pip above the candle (for long) or below the candle (for short). Watch examples for clarifications.

Stop Loss is 1 pip below low of the previous bar (for long trades), and 1 pip above high of previous bar + spread (for short trades).

Trailing Stop
This is what this system is all about.
Stop Loss is trailed to 1 pip below lowest low of last 4 bars (for long trades) and to 1 pip above highest high of last 4 bars (for short trades). Exits are done only by the trailing stop.

Money Management
I risk 2% of starting equity on each trade.

That's about it. Example for trades can be found at my blog, I also post weekly results there. Good trading everyone and lots of pips

Hey Miki, In your blog you have a nifty little indicator called "Range Indicator", if you dont mind, how is it constructed? What program are you using? do you know if it can be done in Metastock?

Also like the 4 bar trailing stop idea. I am a swing trader but looking for a better exit technique and I definately like this one may test it out.


cheers.

 

[Miki256]

Interesting I read John Bollingers book and he actually put me off using them! But you've obviously found a sound way of using them. Although ultimately you're just placing trades on retracement breaks and this can be done just watching price action; its good you've found a methodology of choosing what trades to take or not.

I like trading by the price only. Keeps it simple.

Hey Miki, In your blog you have a nifty little indicator called "Range Indicator", if you dont mind, how is it constructed? What program are you using? do you know if it can be done in Metastock?
Also like the 4 bar trailing stop idea. I am a swing trader but looking for a better exit technique and I definately like this one may test it out.
cheers.

The Range Indicator is based on slope of linear regression channel. Flat slopes indicates range while greater slopes indicate trend. I am glad you liked it

The 4bar trailing is really a nice way to take profits... it keeps you on the big waves . It is also used by the Turtle Traders (at least that's what the book says). It is a great way to TAKE PROFITS in trend-following systems.

 

[Trader333]

Indicators
Only Bollinger(20)

Are you using 2SD for upper and lower bands ?


Paul

 

[Miki256]

2SD. Standard definition.

 

[Miki256]

Update
Results this week: +396 pips.

6 Trades:
GBPUSD +58 pips
GBPJPY +91 pips
EURGBP +92 pips (still in)
USDJPY +123 pips
EURJPY +31 pips (still in)

 

[wrobinson]

Hello Miki256,

My observation is that if you are not actually using the Bollinger bands themselves, that is the solid lines outside the moving average, then you might just as well do away with the Bollinger bands and use a simple moving average, since it will be identical. The Bollinger bands are simply an indicator of the strength of the moving average based on the volatility of the underlying instrument.
If you want to check this, then just put on 20 moving average onto you chart and you will see that it overlays the Bolling moving average perfectly.
But I may have missed something.
W. Robinson

 

[NetTecture]

From the strategy description you are right. The bollinger bands are never used, only the moving average.

 

[Claudia123]

This system will only work in a strong trending market. As you guys say the BB isn't used its the 20 MA which is essentially the BB median.

 

[meanreversion]

I've found that RSI (4) moving below 70 along with a breach but subsequent failure to stay above the upper Bollinger band on the next bar is a very strong sell signal. The risk reward is not always fantastic as you need the move back down first before confirmation, but it works maybe 6 times out of 10.

 

[brooks79]

Everything seems to work in a strong trending market..... Here's for more strong trending markets!!!

 

[brooks79]

I love the simplicity of trading with just price action and maybe a few SMA's for a colorful chart... I think this system looks really good, if your rules will specify that trade only after consolidation, with price showing direction, then trade only after price has broken SMA, wait for a pullback and a touch of the SMA then enter at break of previous high or low....

 

[brooks79]

GREAT JOB on the PIPS MIKI, just STAY the COURSE and let NOBODY take your dreams....