I TESTED a "92% win rate" Bollinger Bands Trading Strategy with NO STOP LOSS - Scalping Strategy 😱

when we look at the bollinger bands it looks like a great indicator to trade forex the price seems to always respect the bands so imagine if we sell when the price touches the upper band and exit when it touches the lower one that sounds pretty obvious right how successful would this strategy be in your opinion that's what we'll learn today [Music] a few weeks ago we received a strategy from asim shaikik who's one of our subscribers he wanted us to backtest a simple bollinger band's trading strategy that according to him has a success rate of 90 so far he's been back testing it manually using the replay mode and an excel spreadsheet thanks to sim for this strategy let's give it a try using an expert advisor this time the best thing about this bollinger bands trading strategy that sim sent us is its simplicity it's only relying on the bollinger bands indicator that i'm sure you guys are familiar with it's probably one of the most simple trading indicators that you can think of no worries i'll explain this strategy in detail and go through some examples from the chart we'll learn when to enter and exit the market and once done we'll back test the strategy together and see how profitable it is so keep watching till the end this strategy relies entirely on the bollinger bands indicator which is a technical analysis tool defined by a set of trend lines plotted two standard deviations positively and negatively away from a simple moving average of a securities price but which can be adjusted to user preferences bollinger bands are a type of price envelope developed by john bollinger the price envelopes define upper and lower price range levels the indicator is available on most chart platforms for instance if you're on trading view you just need to click on indicators then type in bollinger bands you can simply double click it and you'll see that it's been added to the chart if we check the indicator settings we can see that bollinger bands use two parameters period and standard deviation the default values are 20 for the period and 2 for standard deviations although you may customize the combinations this is a lagging indicator which is a tool used by traders to analyze the markets using an average of previous price action data the lagging aspect of indicators will get traders into trades that have greater confirmation behind them as they are based on more data in other words the indicator will force traders to wait a bit before entering so how does this strategy work well when the price touches the upper band and closes above it we go short and we remain in the market until the price touches the lower band let's look at this example this is the daily euro usd chart we can see that the price has touched the upper bollinger band and close above it we immediately go short and exit the trade when the price touches the lower band and closes below it on the other hand we go long when the price closes below the bollinger band we place a buy order the price will eventually touch the upper band in the future and that's the time when we exit the trade there is no stop loss in this bollinger bands trading strategy if you've watched the video where we traded forex with and without stop loss you'd know that this strategy is a bit risky but we'll know the answer in a bit so keep watching as usual we'll back test this strategy using an expert advisor it's built according to this bollinger band's way of trading the market back testing a strategy using an expert advisor is the most accurate and fastest way to review any trading strategy you can easily find the reasons behind some of the losing trades and to find the best settings for each currency pair if you don't know how to build an expert advisor you can find people online who offer this service they usually charge up to 500 if you're looking for sophisticated one otherwise you can learn how to do that from a to z i'm going to leave a link in the description box to an interesting udemy course that you can watch to learn how to easily build an expert advisor even if you're not good with numbers and codes according to a sim who's again the guy who submitted this trading method the bollinger bands trading strategy works best on the daily time frame as the entry signals are more reliable in this setup this is our expert advisor let's do some adjustments before back testing you can see that we're on a daily time frame i'll run this over the last three years and use the euro usd currency pair this would work 90 of the time based on the manual back testing done by a sim we'll use a 1 000 initial balance and allow both buy and sell orders this time which means that the expert advisor will run both long and short i'll let the ea place as many trades as possible we'll enter the market whenever the entry conditions are met so i'll keep this option disabled other than that we'll run this back testing with a 1 micro lot volume size to avoid any early margin call we need to keep the take profit and stop loss disabled this time so the trades will only be closed when the price touches either the upper or lower bollinger bands to protect our balance we'll exit the trade if the price reverses this will allow us to protect our capital in case of any major price reversal let's double check all the settings then hit on start while waiting for the results don't forget to hit the thumbs up button and subscribe to the channel if this is your first time here you can also submit your trading strategy for back testing simply visit this link and provide the necessary details about your trading method we've just completed back testing let's look at the results now apparently our balance has significantly increased by looking at this graph we can assume that the drawdown is not that bad we had 46 trades in total with an average of one entry per month the success rate is more than eighty percent which is fantastic the drawdown is almost twenty percent which is relatively high and apparently we've made a profit of five hundred thirty one dollars and forty eight cents this looks like a great strategy to be honest with you but what if we run this expert advisor over the last 10 years instead of three are we going to make more profit well let's do it i'll only change the time range and run this expert advisor from 2011 to 2021. we can keep the other settings as they are and hit on start back testing customization is extremely important many back testing applications have input for commission amounts lot sizes margin requirements interest rates and many other settings to get the most accurate back testing results it's important to tune these settings to mimic the broker to be used when the system goes live all right these are the results we did make some profit at the beginning and managed to maintain our balance safe for some time but somehow our equity has dramatically dropped after trade number 40. by analyzing the chart we can notice that the price was on a bearish super trend and many buy trades have been triggered here as the price was continuously touching the lower bollinger bands for more than six months apparently it's important to have fixed take profit and stop loss levels for every single trade to avoid this situation only by looking at the chart we can see that some of these 13 losing buy trades will be turned into winners if we adjust the settings accordingly so i would advise assim not to use this strategy you might end up losing a big part of your balance especially if you're stuck in a super up or down trend it's important to come up with an element that will help you filter out these losing trades have you considered a fixed risk to reward ratio we can clearly see that it would help us get rid of some of these losing trades and turn them into winners we already have this option available on our expert advisor so it won't be complicated to test let me know in the comments section the take profit and stop-loss values you want me to use as we continue working on this method what do you think about this bollinger bands trading strategy let us know in the comments section and don't forget to check out the other videos on this channel happy trading you