Today, I am going to speak about my new DAX 40 Bollinger Bands Strategy.
I have been testing out a new strategy using the Bollinger bands, fib retracements, and fib extensions on the 4-hour chart for the DAX. I am currently forward testing this strategy and I plan to keep forward testing it until the end of the year so we can see how it fairs in the long run and if it's going to be profitable or not. I would like to share this idea with you all today.
Let me explain the setup.
We open up the 4-hour chart on the DAX and we open up the standard Bollinger bands.
We then look for entries as soon as we see price break through the top or the bottom of the Bollinger bands. This is somewhat of a reversal strategy. I wait for the price to break either side of the bands, and then I look for the next candle to be the opposite of the candle that broke through or wicked through the bands. If the next candle engulfs the previous candle, I then use the fib retracements to find an entry. I run the fib retracements over the engulfing candle and enter on the 0.236 fib level. My stop will always be a few pips below or above the 1 fib level.
I then take my trend-based fib extension tool and place the three clicks like so :
First click – on the top or bottom of the Engulfing candle.
Second click – The other side of the engulfing candle.
Last click – simply drag the took towards the right and extend it out. I use these two fib levels for my targets.
Generally, I like to see price touch the other side of the bands as my target and if the extension lines up with that, then great. I always look for a minimum risk to reward of 1 to 1.5 or 1 to 2 ( Depending on how far the extension takes us )
As you can see in the video below, so far in the month of July, this strategy generated close to 10% in profits ( risking 1% per trade)
In August this strategy generated 3.5%
So, so far we are doing well with it. I have done back testing with it but I prefer forward testing on a live account as this usually helps confirm the psychology for me entering and exiting this setup.
So, I will keep posting videos whenever A Dax setup presents itself. Let's keep this testing going until the end of the year and then we can decide if we should try it on a funded challenge!
The Vortex Trader
I have been testing out a new strategy using the Bollinger bands, fib retracements, and fib extensions on the 4-hour chart for the DAX. I am currently forward testing this strategy and I plan to keep forward testing it until the end of the year so we can see how it fairs in the long run and if it's going to be profitable or not. I would like to share this idea with you all today.
Let me explain the setup.
We open up the 4-hour chart on the DAX and we open up the standard Bollinger bands.
We then look for entries as soon as we see price break through the top or the bottom of the Bollinger bands. This is somewhat of a reversal strategy. I wait for the price to break either side of the bands, and then I look for the next candle to be the opposite of the candle that broke through or wicked through the bands. If the next candle engulfs the previous candle, I then use the fib retracements to find an entry. I run the fib retracements over the engulfing candle and enter on the 0.236 fib level. My stop will always be a few pips below or above the 1 fib level.
I then take my trend-based fib extension tool and place the three clicks like so :
First click – on the top or bottom of the Engulfing candle.
Second click – The other side of the engulfing candle.
Last click – simply drag the took towards the right and extend it out. I use these two fib levels for my targets.
Generally, I like to see price touch the other side of the bands as my target and if the extension lines up with that, then great. I always look for a minimum risk to reward of 1 to 1.5 or 1 to 2 ( Depending on how far the extension takes us )
As you can see in the video below, so far in the month of July, this strategy generated close to 10% in profits ( risking 1% per trade)
In August this strategy generated 3.5%
So, so far we are doing well with it. I have done back testing with it but I prefer forward testing on a live account as this usually helps confirm the psychology for me entering and exiting this setup.
So, I will keep posting videos whenever A Dax setup presents itself. Let's keep this testing going until the end of the year and then we can decide if we should try it on a funded challenge!
The Vortex Trader
