Bollinger Bands Reversal with Platinum Strategy For MT4
Table Of Contents:
- Bollinger Bands Reversal with Platinum Strategy For MT4
- Call option setup
- Put option setup
- Managing the trades
Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.
The Bollinger Bands Reversal with Platinum Strategy For MT4 uses the concept of bounce and retracement. The bounce concept is used when the price hits the Bollinger band. To get a clear idea about the bounce, we have known about the Bollinger band fast.
The Bollinger band is made up of moving average and provide dynamics trading level to the traders. In most cases, the traders use the dynamic level to execute the call and put option. For instance, the lower band is assigned for the call option and the upper band is designed for the put option. The standalone Bollinger band is not the key strength of this strategy. Tools like Bo0llitoucher and platinum indicator is used.
Since it is not possible to monitor the price chart all day long, the platinum indicator is going to create an alert before the major reversal in any trend. When you combine these three elements and take the trade, you get a powerful trading strategy. But remember, reversal trading is always very risky.
Carefully calculate the expiry level for the trade as you don’t know how long it might take for the bulls or bears to reverse the trend. But this problem is offset to some extent as we will be taking the trades with the help of retracement. Retracement is the price movement against the prevailing trend and it allows us to enter at a more precise price. So, let’s learn about the call and put option trading method with this system.
Call option setup
We have already said the Bollinger band acts as the support level. Since we are going to trade the reversal, after hitting a support level, the price will usually form a consolidated structure. The consolidation might last for 4-8 candles. But if it lasts more than that, chances are high the breakout will take place in favor of the trend and will lose money by trying to take the call option at the reversal.
The price will eventually break above the consolidation pattern and pass through the mid-band of the Bollinger band. The mid-band is a minor resistance level when you opt-in for the call trade. If the break is valid for the mid-band, you will notice a small green arrow pointing upward.
Now it’s time for the price to fall to the mid-band so that we can take the call option. The initial target for the asset will be the upper band. But at times the extension in price might lead to a great extent. Though it is a very elegant way of trade executing a call option by using a premium quality filter and trading technique, we still have to lose trades.
Losing trades are the part and parcel in the trader’s life. So, the profile should be maintained based on the maturity and acceptance ability of the trader. If you feel that you can risk 2%, go for it. But no matter what you feel, you can’t risk more than 3%. Nothing is certain in this market and the risk management rule must be followed.
Put option setup
When the bulls get exhausted and test the Bollinger band resistance, we get the consolidation pattern. Just like the long, the consolidation pattern should last more than 8 candles. The price will slowly head south depending on the news factors. In case, the news favors the bear, you will see a sharp drop in the price and it breaches through the mid-band. If the break is valid, the platinum indicator will print a green arrow at the top of the Bollinger band.
Now we will give you two options to take the put trade. When the break takes place with a massive bearish candle, chances of retracement is low. So, you should immediately execute put option at with an expiry period of 5 minutes or less. But if the break is associated with a medium-size bearish candle, you can wait for the retracement. Take the put option at the mid-band when the price retrace to the resistance area.
As a new user, you should not try to trade the sharp break in the price. As the market might fall sharply by reacting to the economic news. As soon as the fact kicks in the price are reverse. So, it’s better not to take the trade-in such a market state. Regarding your risk profile, you must lower the risk to 1% while using the aggressive trading method.
In case the conservative trading method is used, the risk profile can be extended to 2% in each trade. For the experienced trader, it can be 3% of the account balance. So, the risk profile depends on your trading skills, years of experience, and the ability to control the emotions.
Managing the trades
In any trading system, you will have losses. Those who are good at managing the trade can easily boost up the profit. Being an options trader, your first concern is the expiry. The minimum expiry for the trade is the 60s which is very normal.
But the maximum expiry is 120 minutes for this method. The reason for which we are choosing the 120-minute window is the retracement phase. The price might test the extreme point of the Bollinger band and again start moving in favor of the trend. Even if the trend fails to reverse, you have a high chance to make a profit when the expiry period is very small.
But this doesn’t mean, you will be choosing 60s expiry in all trades. Analyze the volatility and news factor to find your desired expiry time. But don’t be greedy to take the trade before the news though the payout is extremely high at that point. You have to learn to push your career in the safest possible means.
Trying to make big gain with an aggressive trading method always make the traders a loser. To learn more about the advanced trade management technique and imply this with this method. Don’t get too eager to take any trade out of pure emotions. Emotional steps are always proven to be wrong no matter who well you know the system.
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