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Does the Bollinger Bands Percent B Trading Strategy work in the Forex and Stock Market? I tested it 100 times to find its win rate, and here’s what happened.

“Keep trading simple!” You have probably heard that somewhere before. Even though keeping trading simple can avoid unnecessary confusion, not all simple things are always useful. As we saw in the Bollinger Bands Percent B strategy video, Percent B is more like a simpler version of Bollinger Bands. But when I tested that trading strategy 100 times, it made money, and the profit line made a higher swing high at the beginning, but after around the 20th trade, the profit line went in the sideways direction for a while. It gave some good entry signals in a row at the start of an uptrend, but in that same uptrend, especially near the end of the trend, it also gave multiple false signals in a row. Now obviously, near the end of the trend, most trading strategies will give false signals. But in comparison to some other strategies we have tested recently, the Bollinger Bands Percent B gave more false signals in a row.

The Williams Percent Range Trading Strategy we tested 100 times, gave 7 signals near the end of the same uptrend, out of which 5 trades were won and only 2 trades were lost. On the other hand, the Bollinger Bands Percent B strategy also gave 7 signals in the same uptrend, but only won a single trade, and lost 6 trades in a row. You see, in the Bollinger Bands Percent Range Trading Strategy, traders buy when the price breaks above the upper Bollinger Band in the uptrend, but because of this same entry condition, when the trend was coming to an end, many Bollinger Bands long signals, were almost at the top of the trend. In simple words, the entry conditions that were used to identify the increasing buying pressure in the uptrend were the reason for many late false signals when the trend was reversing or slowing down. In an uptrend, strategies that give signals near the end of the pullback, and not near the swing high, perform better in conditions like these.

The Bollinger Bands Percent B Strategy where the signals are taken at the breakout of 100 and zero, was not one of them. With a 1.5 to 1 reward risk ratio, it got a win rate of approximately 38 percent, which is one of the worse win rates we have seen so far. The initial account size was 10000, but it only lost 500 even after 100 trades. So it was not as bad as the Bollinger Bands with RSI Trading Strategy, where the profit graph was consistently going in the downward direction.

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The Bollinger Bands Percent B Trading Strategy gets a TR Score of 18.9 out of 50 and ranks 36th from the top, and 5th from the bottom, below the first Fractal strategy, and above the CCI Trading Strategy.

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Tag: %B indicator

This is the Bollinger Bands indicator, nothing special, you have most likely seen it many times. Beginners can find it difficult to read, it doesn’t look messy as the Ichimoku Cloud Indicator. This is the Bollinger Bands Percent B. And this indicator looks way easier to read than the normal Bollinger Bands indicator. The Bollinger Bands percent B, or Percent Bandwidth, is an indicator derived from the Bollinger Bands Indicator. When the price gets volatile, the Bollinger Bands move far away from each other. And when the price stays in a range and is less volatile, the upper and lower Bollinger Bands move closer to each other. If you don’t like the constant contraction and expansion of the Bollinger Bands, then the Bollinger Bands Percent B is for you. Even your dog can read Bollinger Bands with this. Here’s how it works.

Percent B will show the closing price of the candle as a percentage of the upper and lower Bollinger Bands.

In simple words, when the closing price is equal to the lower band of the Bollinger Bands, the Percent B value will be zero.

When the closing price of the candle is below the lower Bollinger Band, the Percent B value will be lower than zero.

When the closing price is equal to the upper band of the Bollinger Bands indicator, the Percent B value will be at 100 percent.

And when the closing price of the candle is above the upper Bollinger Bands, the Percent B value will be above 100 percent.

Also, if the closing price is equal to the middle line of the Bollinger Bands, Percent B will show a value of 50 percent.

With a normal Bollinger Bands indicator, we consider the price to be oversold when the price crosses below the lower Bollinger Band. And we consider the price to be overbought when the price crosses above the upper Bollinger Band.

But when the price is in an uptrend, the price crossing above the upper Bollinger Band doesn’t have to mean over-bought. In an uptrend, the price has a higher probability of moving in the upward direction, so many traders see the upper Bollinger Band crossover as a sign of increasing buying pressure in the trend, and not a sign to take a short position. A similar thing applies in the downtrend, just the opposite.

In the range market, since the Percent B is derived from the Bollinger Bands indicator, the Percent B value crossing above 100 and below 0 can indicate an overbought and oversold market respectively. But in an uptrend, the Percent B indicator will cross 100 percent multiple times indicating an increase in buying pressure. Percent B will indicate an increase in selling pressure by crossing below 0 percent in a downtrend.

So many traders will use a trend identifying indicator like the 200 period moving average, and will buy when the Percent B indicator crosses above 100 percent only if the price is above the 200 period moving average. When the Percent B indicator crosses below Zero Percent, many traders like to take a short position only if the trend indicator like the 200 period moving average is indicating a downtrend. In an uptrend, use the pullback and set the stoploss below it. And in the downtrend, set the stoploss above the pullback.

To see if this strategy makes money or not, we will test the Bollinger Bands Percent B Trading Strategy 100 Times in the next video, just like many other strategies we have tested on the Trading Rush Channel.