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Stochastics with Bollinger Bands

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Saw this idea on a Youtube video.  I've been interested the concepts behind Bollinger Bands and Stochastics but didn't find them to be useful separately.

Do you think it's worth testing this strategy, using them together?

1) Sell when upper Bollinger is rejected and %K drops below %D from an overbought position

2) Buy when lower Bollinger is rejected and %K rises above %D from an oversold position

3) Sell when %K drops below %D on a bearish candle when the Bollinger Bands are narrow (breakout; does not require overbought)

4) Buy when %K rises above %D on a bullish candle when the Bollinger Bands are narrow (breakout; does not require oversold)


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Put your stop above the previous high (where upper Bollinger Band was rejected) / previous low (where lower Bollinger Band was rejected) / beneath bullish/above bearish candle (when you are trading a breakout)

When placing your TP look for a 1:1.5 relative to the stop loss.


Edited by dmedin
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46 minutes ago, dmedin said:

Looking much better with 200 EMA as a filter.  Still using stochastics as indicator of when to take a position :D 

yes, think of the ema as a slow oscillator and the stoch as a fast and so wait til they are lined up and going in the same direction, ema is the trend indicator and stoch is the trigger indicator.

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On 25/08/2020 at 12:26, dmedin said:

Per Tradingrush.com suggestion, only long when above 200 EMA and only short when below 200 EMA?  In which case, is the stochastic indicator redundant?


Does it mean that we shouldn't open BUY trade when the entry point is below 200ema and no SELL trade if above 200ema? Can you please calrify a bit more please?


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2 hours ago, supshin08 said:

Does it mean that we shouldn't open BUY trade when the entry point is below 200ema and no SELL trade if above 200ema? Can you please calrify a bit more please?


Yes, you're right.

My original intention was to try and find a use for the Bollinger Bands. 

You know that there are two approaches, selling/buying bounces off the outer bands is one; selling/buying breakouts from narrow bands is another.

But if you just follow every signal the Bollinger Bands gives you, you'll lose a LOT of money.  Hence it needs a filter.

Some filters I've seen mentioned are using stochastics; waiting not just for a bounce but for a move back above/back below the 20 MA; determining the trend using a higher time frame; and using the 200 EMA.

They all need to be tested, tweaked, optimized to see which works best.

I'm kind of leaning into thinking BB isn't great for making trading decisions, but other people seem to be able to make use of it.

Edited by dmedin
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  • 4 months later...

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