Bollinger Bands 20, 2.5 - always wins, what am I missing?

[Guest TheDudeLondon]

Hi folks,

I haven't traded for many years and started recently again. Pretty simple strategy: I am looking on a daily chart for the major indices (eg S&P500, Nikkei 225, DAX30) and have Bollinger bands (20, 2.5). As soon as there is a significant breakout below the lower band (or higher band, but since I have started trading, it was always the lower one) I will buy in. Usually not into a straight falling knife but wait until there is some stability eg for 15-30min at a low level.  

I have placed now around 15 trades and although some of them were deep red (i have to start reading up again on stop loss, money management etc) at some point, they all bounced back into the Bollinger Bands and gave me a nice profit. Always within 24h, in the vast majority within 8h (ie same day).

Now I realise that's an extremely simple strategy but I have 15 winning trades out of 15 and made around 3k on a 20k account. 

What am I missing? I am deeply pessimistic usually and if something is too simple, there is usually a major issue. Obviously, looking on longer windows, opportunities with the above are rather scarce as the prices are usually always within the Bollinger Bands and I guess I was lucky with the high volatility to have so many opportunities, but it seems like a simple and effective strategy as of now. 

[Caseynotes]

Good going @TheDudeLondon, You are right, looking at the longer term picture the opportunities are very rare. Looking at the S&P your strategy was triggered 4 days out of the last 7, but looking back only once more for the whole year to date (March 8th). Getting a good run in a period of unusually high volatility, make the most of it while you can.

[dmedin]

Be careful not to lose all the profit later on. 

[Kodiak]

If you use a simple logic like outside the band and then close inside the band its easy to backtest 

But dont quit your day job before the backtest😁

https://quivofx.com/expert-advisor/bollinger-bands-ea/

 

[Caseynotes]

5 minutes ago, Kodiak said:

If you use a simple logic like outside the band and then close inside the band its easy to backtest 

But dont quit your day job before the backtest😁

https://quivofx.com/expert-advisor/bollinger-bands-ea/

 

er ... what? 🙂

[phillo]

Tradeciety - How to use Bollinger Bands  https://www.youtube.com/watch?v=iIPiBApycrc

[Guest theLondondude]

5 hours ago, Kodiak said:

If you use a simple logic like outside the band and then close inside the band its easy to backtest 

But dont quit your day job before the backtest😁

https://quivofx.com/expert-advisor/bollinger-bands-ea/

 

Don't think it's that easy to backrest because I did never buy the moment it crossed the Bollinger band. Usually it drops out of it quite sharp, there is a bit more “soft judgement” as I observe the price development until I feel there is some stability well below the Bollinger band. My Limit Sell is then usually at the Lower Bollinger Band (could probably do a bit more setting it higher as they are always moving into it, but not being greedy here). 

I think if you just buy at the crossing points, which is something you can backrest, the stats would be pretty poor (especially in an environment of falling Bollinger bands).

[Guest hotshot]

used with the Fibonacci will help you even more

[Guest TheLondonDude]

Actually amazing how it works - signals are rare, but the rebound reliable. Entered DJI today at 870, took a hit as it further dropped until 830 but a bit later back up and sold at 999, with the lower BB being at 87. 

129pts Profit, that’s around 20 trades now which all worked.