M Tops and W Bottom's Using Bollinger Ba
Well, this is a very simple and easy to implement system that can be used in any market and on any time frame depending on your risk appetite.
I personally primarily trade EUR/USD and GBP/USD on the 1M chart.
index:
1) Bollinger Bands uses default parameters, if your Bollinger Bands indicator does not have a middle band, add 20 SMA.
2) Volume
M top formation rules:
1) The first closing price must be outside the upper band
2) Price should then correct slightly and close below the mid-range or 20 SMA
3) Price should hit a high but not get close to above the upper band and correct again and close below the middle band as volume increases.
Note : Before the M top appears, the price must be in an upward trend. Trying this in a range-bound market is not going to yield great results.
stop loss
Keep your stop loss high but sometimes the reward is too much and the risk is too little, so in this case increase your stop loss to risk/reward ratio to 1:2
I personally primarily trade EUR/USD and GBP/USD on the 1M chart.
index:
1) Bollinger Bands uses default parameters, if your Bollinger Bands indicator does not have a middle band, add 20 SMA.
2) Volume
M top formation rules:
1) The first closing price must be outside the upper band
2) Price should then correct slightly and close below the mid-range or 20 SMA
3) Price should hit a high but not get close to above the upper band and correct again and close below the middle band as volume increases.
Note : Before the M top appears, the price must be in an upward trend. Trying this in a range-bound market is not going to yield great results.
stop loss
Keep your stop loss high but sometimes the reward is too much and the risk is too little, so in this case increase your stop loss to risk/reward ratio to 1:2
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