Trading with Double Bollinger Bands.
Our course on Double Bollinger Bands (DBB’s) is divided into several lessons. DBBs are a powerful variation on the standard single Bollinger Band, because they can tell us much more about momentum and therefore trend strength, both in flat and strongly trending markets.
Double Bollinger Bands are 2 sets of BBs, using default settings set at the usual 2 standard deviation distance above and below the 20 period simple moving average line in the middle, as well as a second set of BBs plotted just 1 standard deviation above and below that central moving average.
Traders can, and do, tinker with the type and duration of the moving average and the number of standard deviations.
The two sets of Bollinger bands create three zones and we will talk about each zone and what they mean relevant to the position of the price movements. We will explain the 4 rules associated with these zones, and how to follow them in order to trade profitably.
7.1 DBBs - Definition and Construction.
In a previous lesson, we learned about Bollinger Bands as an indicator that can be useful in flat or gently trending markets, but not during strong trends. Now we will learn about Double Bollinger Bands (DBBs).
Double Bollinger Bands are a powerful variation on the standard single Bollinger Band, because they tell us much more about momentum and hence trend strength, both in flat and strongly trending markets.
This lesson will show that unlike standard Bollinger Bands, Double Bollinger Bands are exceptionally useful in strongly trending markets, because they help us to better determine the true momentum shown within the candlestick price action.
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7.2 DBBs - Three Zones, Three Rules.
As we have already shown, two sets of Double Bollinger Bands create three zones: a sell zone, a buy zone, and a neutral zone. In this lesson, we will show how prices move within these zones and what these moves can mean for the trader.
When using the Double Bollinger Bands indicator, it is essential that you follow the 3 rules outlined in this lesson.
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7.3 DBB's - 4 Rules, Rules 1 & 2.
In this lesson we give a detailed explanation on the rules required as a basis for utilizing the Double Bollinger Bands trading strategy successfully. We will show how to apply rules #1 & #2 to the 3 zone concept we learned previously.
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7.4 DBBs - 4 Rules, Rule 3.
In this lesson we outline the 3rd rule of the Double Bollinger Bands trading strategy. When the price action has started to settle within the neutral zone , that’s a signal to exit any trades that are riding the current up or down trend, because that trend is now showing weakness.
There isn’t enough up or down momentum for us to have confidence in the uptrend or downtrend continuing, so it is time here to think about getting out and perhaps utilizing a range-based trading strategy instead.
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7.5 DBBs - 4 Rules, Rule 4.
This lesson reviews Rule 4 of the DBB trading strategy rules. Rule 4 attempts to cut the risk of buying at the top or selling at the bottom that comes with chasing a strong trend that has already made significant progress and may be approaching major resistance or (if it has broken past historic highs or lows) exhaustion.
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Double Bollinger Bands.
Is the EURO in trend or range? Is it time to pick a top or bottom?
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Double Bollinger Bands Forex Strategy.
I came across Kathy Lien talk about Double Bollinger Band strategy quite a lot.
More information concerning the usage of the strategy is best explained by Kathy Lien in her YouTube webinars.
Basically there are two Bollinger Bands:
1. 20 Period, 1 Standard Deviation.
2. 20 Period, 2 Standard Deviation.
Recommended Time Frame is Daily or 4 Hours.
Basically we want the currency pair to roll over close below the 1 Standard Deviation (Green Band). This tells us the up-trend has broken, the momentum has been lost and the currency pair is now reversing. We then Short it at the next candle.
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Forex double bollinger band strategy

This strategy is designed to give all of this precise information based on which any trader can make a better, more informed and more profitable trading decision.
​However, we are going to use them in a special kind of way. Essentially in a way where each of them confirms the signal from the other indicators and therefore hugely stacking the probabilities in our favor.
The deviation of one Bollinger Band (BB) is 2 while for the other is 1. In our examples here on the charts, the black BB is with the standard deviation of 2 while the blue BB is with the standard deviation of 1.
If there is no native option to add a double Bollinger Band in your trading platform you can always add 2 BBs where one is with a standard deviation of 1 and the other is with a deviation of 2.
​Entry rules:
Price needs to cross and trade inside of the upper bands (in an uptrend) or inside of the lower bands (in a downtrend).
It’s also wise that before triggering the entry you switch and look at the lower timeframes to try and pinpoint a better entry price. Often times Price Action patterns on lower timeframes will give a chance for a better entry.
In the following example on USDCAD, a same time crossover signaled the start of a nice uptrend that yielded almost 200 pips with this strategy.
Stop-Loss Placement:
The initial stop loss is placed behind the band with a deviation of 1 (inside Bolinger band). So, below the band in an uptrend and above the band in a downtrend. The charts below will make this more clear.
In this USDJPY example, the Stochastic and the MACD started to turn before the price closed outside of the band. This is a common occurrence and helps to confirm that the trend is near exhaustion.
Managing the Opened Trade, Trailing the Stop-Loss:
There are no profit targets – only managing the stop-loss.
​For example, if it appears at a support or resistance level then it should be looked at carefully as a reversal is much more likely. On the other hand, if there is no support, resistance or other obstacles then it can be false and not much significant. The ongoing trend will probably continue.
​​​​​​Related education and FX know-how:
Does this crossover strategy work on all time frames and currency pairs?