It is quite probable you have heard about the Bollinger Bands. It is an indicator you will find among other tools on IQ Option. If it is, however, new to you, I encourage you to read our article about Bollinger Bands.
Now, I wish to present a new way of using the Bollinger Bands. It is known as the BB1 strategy.
Log in to your account. Choose the asset and decide on the amount of money you wish to invest. Select the Japanese candlesticks type of the chart. Then, click on the indicators icon and search for the Bollinger Bands.
The indicator has its default settings. For the needs of today's strategy, you will have to change its deviation to 1. That is where the name comes from – the BB1 strategy.
The Bollinger Bands indicator has a form of three lines. The central one is the Simple Moving Average. The other two create lower and upper bands.
Beneath there is a chart with two Bollinger Bands added. The SMA period has the same value, which is the reason why the central line is common for both. But the deviation varies. In the inner BBands it is set at 1, and in the outer at 2.
Trading with the BB1 strategy on IQ Option
Trading with the strategy BB1 is not very complex. Your task is to keep observing the chart and await the signals. I will write in a moment what they are.
Your position can last around three times longer than the timeframe of the chart. So if you use a 5-minute chart, the expiration time should be set for 15 minutes. It is not always possible because the expiration interval for binary options is 15 minutes. If for example, you will get a signal at 13:10, you can choose the expiration time as 13:15 or 13:30. Go for the next one, it is closer to 15 minutes.
Opening short trades with the BB1
A signal to enter a short trade occurs when the candle closes below the lower line of the indicator. You should check the previous two candles. They ought to close above the lower band.
Below you will find the exemplary chart where such a situation took place. A candle signed as 3 closes below the lower band. Two previous candles (1 and 2) close above this line. Open a short transaction when candle number 3 closes or right at the start of the following bar. The trade can last the duration of the 3 successive candles.
Opening long trades with the BB1
For a long position to be opened wait for the candlestick to close above the upper border of the Bollinger Bands. Ensure that two former bars have closed below the upper band.
Consider the chart underneath. A green candle number 3 closes above the upper bands of the indicator. Two previous candles, one red and one green close below the upper line. This is a signal to open a position for the price increase. Do it when candle number 3 closes or the following candle opens. The expiration time should be set for around 15 minutes that is the duration of 3 consecutive candles.
The BB1 strategy is based on the Bollinger Bands indicator with a deviation of 1. It produces trading signals in the trending markets. A signal to go short can be obtained during the downtrend and a signal to go long during the uptrend.
You have to observe the price bars and the Bollinger Bands lines. When the candles close below the lower bands, or above the upper band, you need to check where the two preceding candles have closed. If they close in the way I have described above, you can open a trading position that lasts as long as the development of three subsequent candles.
Test the BB1 strategy in the IQ Option demo account. It is available for free and you do not invest real money there. Check how it works and after some practice, you will be ready to move to the live account.
Wish you high profits!
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