The price quickly moves towards your upper Bollinger band and at this point is around 1.5 times your risk. Because the last low is quite far away I would suggest placing your stoploss at the middle Bollinger average as the price starts to break in your trade direction. The break of the high of the “up” candle is your entry. Highlighted on the chart are the first candles which close “up” after the Bollinger’s move above the 100 exponential average. The direction then switches and both Bollinger’s push above the 100 exponential average, confirming buying mode. At worst you should have been stopped out at breakeven. If you are fast enough and have practiced the system, it’s possible you may have closed out for one multiple of your risk. As the price starts to push down to the lower Bollinger band you get your stop quickly to the breakeven level. On the next example both Bollinger’s move below the 100 exponential average, you then get a down candle which triggers a sell trade. Then either start to trail it down locking in your profit, or closing the trade between one or two times your risk. Once the price has moved down towards touching the lower Bollinger band you need to get your stop quickly to breakeven. Bear in mind you want to keep the risk as small as possible on these trades to make this work. Your stoploss is placed at either the last small high in the price, or at the middle Bollinger level, or at your maximum you are willing to risk on the trade. Then you are looking for a candle that closes down, and the entry is triggered when the low of this candle is broken. Once again you are looking for the lower Bollinger band and the middle Bollinger average to push below the 100 exponential moving average.
The next highlighted area on the above chart shows a sell trade. Start moving your stoploss up from breakeven (or from the middle Bollinger) and trail it underneath the low of every candle that closes up. If the move has been sharp you may want to try and lock in some profits, as often it can retrace quickly. Ideally, if you risked 10 points you want to be taking between 10 and 20 points profit from a trade. If you are quick and get your stop to breakeven you can look to exit this trade somewhere between one or two times the risk (distance between your entry and initial stoploss). Often after the Bollinger bands have contracted price breaks out with a sharp move. With practice you get a feel for the correct place to put your stoploss to allow your trade freedom to move. If the trade moves up sharply you may want to place your stoploss at breakeven right away (actual entry point). This will remove most of the risk from the trade. Once it moves towards the upper Bollinger band you need to move your stoploss up to the middle Bollinger band level. What you are looking for is the price to continue and approach or touch the upper Bollinger band. To keep your risk to a minimum you need to be fast and efficient at moving your stoploss up under the price. This is now where practice comes into play. I’ve shown this entry and stoploss level with two small yellow lines. Your stoploss would be placed at either the last low in the price, or at the lower Bollinger band. The first highlighted area shows a candle closing up, which then moves higher on the open of the subsequent candle. Take a look at the example on this chart. Once an up candle has formed you are looking for the price to break beyond the high of this candle. It’s important this is a bull candle, if the candle crosses the middle average but closes as a down candle you need to ignore this and wait for an up candle. What you are then looking for is a candle to close “up” above the middle Bollinger band average. So for instance on the chart below, buying mode has been established because both the upper Bollinger band and the middle Bollinger average are above the 100 exponential moving average. This system takes trades in the direction of the Bollinger bands into the extremes. Once you have determined if the price is in buy or sell mode you will then be looking to enter a trade.
One of the things you might want to look for are the tightening of the Bollinger bands after a change in direction, often a small impulsive push comes right afterwards. Make sure you test out this system on a demo account before you trade it for real, and make sure you get a feel for when the best trades might come.
There are things to look for which will become very apparent as you trade this in real time yourself.