Bollinger Bands

The speaker discusses a bollinger band trading system that he has developed to trade the markets.  He uses the 21 day moving average as the basis of his trading system.  He first looks for a trending market and buys the first shakeout below the 21 period moving average.  In the video, he will discuss his precise entry and exit rules, including money management. 

The speaker discusses two of his favorite technical indicators; the bollinger bands and on balance volume.  He mentions that it is very important to take note of divergences in on balance volume, when the stock is moving higher and the on balance volume is moving lower.  This is where the strong hands will liquidate their positions to the new money, or more inexperienced traders who chase stocks.

In the second part of this video, the speaker covers the bollinger bands.  He suggests that it is not all to useful all by itself, rather, it should be used with other technical indicators.  He mentions that when the bands tighten, you should expect a sharp move out of that consolidation.  Conversely, when the bollinger bands expand, volatility increases and one should look to either exit their position or go the opposite way. 

The speaker illustrates a popular bollinger band strategy in the forex market.  He looks for a breakdown throughout the bottom of the bollinger bands and then waits for a backtest of the bollinger bands and shorts the pair.  He suggests that his exit strategy is to get out of his short positions when a significant support level is hit or the pair closes above the 10 period moving average.

He strongly suggest to avoid shorting the actual breakdown as the market will normally retrace some of its losses before heading lower.  He also provides his custom settings on the bollinger bands.  He sets the bollinger bands to have a length of 14 with 1 standard deviation.