In this video, I'm going to show you a trading strategy that works so good, I just have to tell you guys. And it involves using Bollinger Bands and RSI. It's simple, easy to use, and it has a pretty high success rate if you use it correctly. Well, enough talk. Let's get straight to it.
The first step for this strategy is setting up the Bollinger Bands. If you've never used Bollinger Bands before, you're lucky you clicked this video, because this indicator is absolutely incredible, and it's a pretty great way to find support and resistance levels.
So the first thing we want to do is go to Trading View or whatever trading chart platform you use, click the Indicators tab and type in Bollinger Bands. Now, the default settings Trading View will give you are pretty nice, but we want to change them for this specific strategy. First
thing you want to do is go to the Length section and change the value to 30. Make sure the standard deviation is set to 2. Then I'm also going to remove the background of the indicator. This is all personal preference. You can do whatever you prefer here. So if you didn't know, this is how Bollinger Bands work. The centerline is a moving average. So whatever amount that length
is, this indicator is going back that many candlesticks and finding the average between them.
，這個指標會回顧多少根蠟燭圖，並計算它們之間的平均值。
01:10
So for this strategy, we are going back 30 candlesticks. The lower and upper lines are standard deviation lines. Alright, we got the Bollinger Bands set up. Now let's add RSI.
To do this, just go to your Indicators tab, type in RSI and then click this top one that says Relative Strength Index. Now that we have RSI added, let's modify the settings a bit. Make sure the upper band is set to 70 and the lower band is set to 30. Then the length is probably set to 14.
For this specific strategy, we want it to be set to 13. If you haven't used RSI before, it's a great indicator to tell you if a certain security is being overbought or oversold.
If the line is above the 70 value, it's being overbought. If the line is below the 30 value, it's being oversold. Now it's time to pair these two indicators together and get some profitable trades going. Make sure you watch the rest of this video because I'm going to explain a crucial tip
to make the strategy go from working just okay to turn it into a money-making machine.
，讓這個策略從僅僅「還不錯」變成一個賺錢機器。
02:09
So there are two different strategies you can choose from when using these indicators.
使用這些指標時，您可以選擇兩種不同的策略。
02:13
Both of these strategies are built around the concept called mean reversion.
這兩種策略都圍繞著一個稱為「均值回歸」的概念。
02:18
What's mean reversion you may ask? Well mean refers to the word average and the word reversion means returning to. So to put it simply, the phrase mean reversion just means returning to the average, which is exactly what we're going to be shooting for with this strategy. So as an example, in most
cases, if there's an extreme price movement in one direction, whether it's up or down, we can pretty much predict after that big price movement that the price will return back to the average, the moving average right here. So if the price goes above the upper ballinger band,
we want to enter a short trade. If the price goes below the bottom ballinger band, we want to enter a long trade. Simple enough, right? Well, if you did this by itself, odds are it wouldn't work too good. That's why we added the RSI earlier. So as you can see in this example,
the price went above or below the ballinger bands many times, giving lots of false signals.
價格多次高於或低於布林通道，產生了很多假訊號。
03:14
So if you went in every time here, you probably lost money. To solve this issue, we are going to add one more requirement. You can only go in if the RSI hits an extreme value, meaning we can only enter a long trade if the price moves below the lower ballinger band,
and the RSI goes below the value of 25. For shorting, we will only enter a trade if the price goes above the upper ballinger band, and the RSI goes over the value of 75. So as an example here, we are looking at Apple, and the price starts going below the bottom ballinger band. But at this
且RSI跌破25。至於放空，我們只會在價格突破布林
03:49
point in time, the RSI is still not where we want it to be. So we waited out a bit until the line goes below 25, which it proceeds to go down all the way to 20. We enter a long trade at this point, and the price returns to the average, just like we predicted it would.
Now, there's some crucial information you need to know about this strategy, or else it simply just won't work. This next tip I'm about to tell you is the difference between making this strategy profitable or making it a money loser. Where this strategy has its faults is when the market is moving sideways. For almost all trading strategies, when the market
is moving sideways, it's a lot harder to predict. So as an example here, the price goes below the lower ballinger bands, and the RSI is below 25, but the price just keeps on dropping and dropping.
So if you entered here, you would have an absolute massive loss. So now I'm going to show you a nice little trick, so you know what the price is going to do before it even happens. So in this example, notice how skinny the ballinger bands are at this point in time. They are very close together,
and there's barely any price movement, and the market is moving sideways. You can also see that the RSI is being very tame and staying in between the purple rectangle and not going above or below the major points we made before. This alone should immediately raise a huge red flag. Most times,
when the market is like this moving sideways for a while, when the price does break in a certain direction, it goes in that direction with huge amounts of momentum. So in these types of examples, you never want to trade trying to catch a falling knife when the price starts acting like this.
Let me show you another strategy we can use to help solve this that works like absolute magic.
讓我再教你另一個策略，這個策略簡直像魔法一樣有效。
05:33
Here you can see the price starts to drop to the lower ballinger band and then reverses.
這裡你可以看到價格開始下跌至下方布林帶，然後反轉。
05:38
The next time it comes down, it makes a new lower low from the previous low, but something interesting is happening. The RSI made a higher low, so we have price making a lower low, but the RSI is making a higher low. This right here is called divergence, and it's an absolute great sign to
enter a trade, especially if RSI was previously below 25 and the price went below the lower ballinger band. If this happens, there's an extremely great chance the price will reverse and make a new higher high. I just showed you how to pair the ballinger bands with RSI and make it
a profitable trading strategy. All I ask in return is if you can take t and like this video. You should also watch my other video where I go over my MACD strategy, which gets an 86% win rate, which is absolutely insane when it comes to trading. So go check that
