Educational Series: Trading with Bollinger Bands (Part 3)

The last feature of the Bollinger Band involves a slight addition to the standard indicator. Another set of Bollinger Band is added, but this time, a 0.75 standard deviation is used (instead of the 2 standard deviations).

The 0.75 standard deviations Bollinger Band is indicated by the black lines.

Now, look at the space between the 2 standard deviations and 0.75 standard deviations Bollinger Band. This is indicated by the white space. When price trades within the white space, I'd call it the Bollinger Trend.

What you should notice is that
- When the price trades within the white space, it enters into a trending scenario.
- A dynamic channel is formed, with the Bollinger Bands providing the diagonal support/resistance levels.
- When the price breaks through the 0.75 standard deviation Bollinger Band and moves towards the moving average, the trend ceases.

The Bollinger Trend is not easy to use UNLESS
- You pair it with key support/ resistance level
- Apply this only to the H1 or H4 timeframe
- Deploy a trailing Stop Loss, BUT Take Profit must be fixed