Trending versus ranging regimes: how do you trade both?
Most strategies favour one regime and suffer in the other. The traders who handle both either run two strategies, use regime filters, or trade one regime and sit out the rest.
What's your structure?
- how you classify the current regime
- the strategy each regime gets
- how you avoid trading a range like a trend
The trend lines guide and Bollinger Bands guide supply the classification tools.
Background: Bollinger Bands explained: the squeeze, band walks and mean reversion
Bollinger Bands wrap a moving average in two volatility bands. Learn how they're calculated, what a squeeze means and why touching a band isn't a signal on its own.
What are the standard Bollinger Bands settings?
A 20-period simple moving average, with bands 2 standard deviations above and below it.
Is touching the upper Bollinger Band a sell signal?
Not on its own. In a strong uptrend price can ride the upper band for a long time. A touch shows price is stretched relative to recent volatility, which needs other evidence before it becomes a trade.
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