The experienced traders love to use the Bollinger band. It helps them to predict the best trading spots. The upper and lower band acts as the critical demand and supply zone. By using the other technical parameters, any trader can make a profit. However, the experienced Singaporean traders always suggest using the Bollinger band in the daily time frame. But analyzing such a big time frame is a very time-consuming process and limit the profit to a certain extent. To deal with these issues, the professional traders have come up with a unique idea to trade the 1-hour time frame. Read this article carefully if you wish to learn the 1-hour trading strategy by using the Bollinger band.
The validity of the support and resistance
We all know the upper band is our selling zone and the lower band acts as the perfect buying spot. Executing trades on both bands is a great way to make a profit. But switching to the 1-hour time frame increases the risk and reduces the win rate. However, if you can predict the market trend, you can eliminate this problem. Assume CADSGD pair is in a downtrend. You have identified the trend by using the daily time frame. So, if you wish to trade the 1 hour period, you should look for selling opportunities only. Never try to place an order at the critical support as it will make trading harder.
Avoid trading the high impact news
Dealing with the 1-hour time frame in the CFD trading industry is more like scalping the market. As a scalper, you should learn about the high impact news. The market becomes unstable after the major news and it doesn’t give any importance to critical support and resistance level in the lower time frame. So, if placing the trade at the dynamic bands after the news release will always result in a big loss. So, try to stay out of this game when you have high impact news. You don’t have to trade 24 hours a day to make a decent living out of trading. Focusing on the core factors and taking intelligent decisions based on simple logic will help you to overcome the obstacles in trading.
Take less than 1% risk
We all know taking a 1% risk is considered a safe approach. But if you focus on the 1 hour period, it’s no longer safe. You must risk less 1% in each trade as it will save your capital form the losing orders. Though it will greatly reduce your profit factor it is the only way to ensure high-quality trade execution. Thinking about the big profits and taking extreme decisions based on the Bollinger band doesn’t make any sense. Making profit is hard but when it comes to recovery factor it's insanely difficult. Always think about the conservative trading as it will keep you safe.
Tweaking the value of the indicator
Some of you might have advance knowledge of the Bollinger band. The band works on the simple principle of moving average. So, if you wish to make some profit, even at extreme market conditions, you need to tweak the default settings. Bringing any major change to the default settings requires back testing of the strategy. You can use the Saxo demo account to back your new settings. If you feel comfortable with your result, you might start to trade the extreme market by using the Bollinger band. But remember, you are dealing with the 1-hour time frame. You can’t afford to make any decision based on emotions. If you do so, the chances of making a profit are almost nil. Most importantly, you will not learn anything new from this market. So, focus on the safety of your trading capital and stop risking any amount when you don’t know how the system will work.