Last Updated on May 15, 2025 by Tim Morris

The Bollinger Band with 20-period Forex Swing Trading Strategy

The Bollinger bands strategy with 20-period moving average is a swing strategy that uses 2 standard deviations and has a 20-period.

Trading Rules:

Information:

• The market is in a downtrend if the price is moving below the 20-period or the middle line.
• The market is in an uptrend if the price is moving above the 20-period.
• The price must touch the middle band or the 20-period before you enter into a trade.
• The upper and lower Bollinger band can be used as a target profit. You can exit your position when it touches these lines.

Sell Entry:

1. The market must be in a downtrend and the price must touch the middle Bollinger band.
2. Place a sell stop order 3-5 pips below the low of the candlestick when the market touches the middle line or wait for the bearish reversal candlestick to form before you put a sell stop order.
3. Place the stop loss around 5-10 pips above the high of the candlestick.
4. Exit the trade when the price goes back down and touches the lower Bollinger band. You can also set your take profit level equal to the distance the price traveled in pips during that upswing to touch the middle Bollinger band line or you can take profit at the previous swing low.

Buy Entry:

1. Place a buy stop order 3-5 pips above the high of the candlestick that touches the middle Bollinger band line.
2. Place you stop loss 5-10 pips or move below the low of this candlestick.
3. Set your target profit as described above in the sell rules but in the opposite.

ADVANTAGES:

• This strategy involves a low risk with good risk and reward ratio.
• Can gain big profits easily in 4-hour and daily timeframes
• It uses the price action to confirm entries that can lead to a profitable trades.
• Works best on a trending market.

DISADVANTAGES:

• This strategy does not work well in a non-trending market.

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