How to trade using the BB1 strategy (Bollinger Bands with a deviation of 1) on Olymp Trade
Bollinger bands are one of the technical analysis tools used by traders to make it easier to read the market. It can be applied in many ways, and today I will show you a strategy based on Bollinger Bands with a deviation of one.
Chart Setup
You must log in to your Olymp Trade trading account. Think about what specific instrument you are going to trade. Then click the indicator icon and find the Bollinger Bands indicator. It will appear above the price bars. It is formed by three lines; two stripes and a middle line.
Each indicator comes with default settings. Today's strategy requires you to change the deviation. To do this, click on the pen icon next to the indicator name. You will see an SMA with a period of 20 and a standard deviation of 2 by default. Change it to 1.
How to set the standard deviation to 1 in the Bollinger Bands settings
Below you will find a chart with two Bollinger Bands attached. The deviation of the average is set to 1, and the deviation of the external is 2. The average line is common, since the SMA period remains the same for both.
BB1 Strategy for Olymp Trade Traders
The BB1 strategy is based on the Bollinger Line with a deviation of 1. It's pretty simple. Watch the chart and wait for the intersection of the price and the BBands line.
Long positions
If you want to open a position for a price increase, you should wait for the candle to close above the upper indicator band. Make sure that the two previous candles have closed below this line.
The approximate chart below shows that the green candle, marked as candle No. 3, closes above the upper band. The two previous red candles close lower. This gives you a signal to enter the trade at the very beginning of the next candle. You can keep the position open for 3 consecutive candles.
Short positions
To open a short position on the BB1 strategy, wait until the candle closes below the lower indicator band. Bollinger bands. Also check if the previous two candles have closed above the lower BB1 band.
Take a look at the diagram below. The candle with the number 3 closes below the lower band. Candlesticks No. 1 and No. 2 close above the lower indicator band. Enter the trade down at the close of the third candle or at the very beginning of the next candle. Keep the position open for the next three candles.
The strategy based on Bollinger Bands with a deviation set to 1 is very simple. It can be applied to fixed-time transactions. This is a trend-following strategy, which means that there must be a trend in the market. You are trading on a trend, so you are looking for an opportunity to open a long position with an uptrend and a short position with a downtrend.
With the Bollinger Bands attached and the deviation changed to 1, your task is simply to watch the chart and wait for the price to close above or below the indicator bands. Check where the previous two candles closed and get a trading signal or not. If all three candles close as described above, this is your setup to enter the trade. You should exit after three consecutive candles.
Don't forget to test the BB1 strategy on the Olymp Trade demo account. This is offered to you completely free of charge. This gives you the opportunity to study the method well before investing real money.