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If you wanted to dominate Bollinger Bands, how would you do it? Good question and the first thing is to understand what Bollinger bands are and what they measure. The bands are a representation of the standard deviations of the mean, usually 1 to 2 standard deviations.

This alone is quite revealing because when you understand the concept of reversal, you understand that the price stays within the second standard deviation about 85% of the time. You may not connect the dots at this point, but what you should conclude is that if the price closes outside the 2.0 standard deviation and IF stays within 85% of the time, then there is at least an 85% chance that the price is reversed. here. (Possible entry perhaps?)

With that said, the next step for the knowledgeable observer is to develop a set of rules for entry that allows you to enter a trade and exit a trade and make a profit most of the time.

Sometimes it may be prudent to adopt an overbought / oversold approach to entry, increasing the likelihood of a decent sized move and at least an initial push in the favored direction by moving the price away from your stop and minimizing your risk .

Keep in mind that the more rules you set for entry, the more likely you are to lose a potentially profitable trade. As you develop your rule set keep in mind that the most profitable rule sets have a win / loss ratio, some you will win and some you will lose.

If you try to get a 100% win rate, your profit will decrease due to the number of lost trades. This here is one of the keys to your long-term success; don’t try to find the HOLY GRAIL flippin because it happens to many trades – period.

Find a profit / loss balance and stay exposed to both profit and risk, because if you eliminate risk, you eliminate the opportunity for profit exposure.

That said, set your charts and set a 1.0, 2.0, and 3.0 standard deviation on the price and you get a nice set of bands that allow you to see the price and create a set of rules. Start with a 2.0 standard deviation method and continue from there.

You can consider any closing beyond the 2.0 standard deviations when a slow stochastic is in a favorable overbought / oversold condition that emits a buy or sell signal. If you go long, draw a line at the high of that trigger candle and enter as soon as the price crosses or closes beyond that high. There are a number of variations, but this should encourage your thinker. Bollinger bands are an amazing tool for any type of trader. If you are not using them now, you are missing a view of the price that you will not see with any other indicator.

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