In this blog, we’ll outline a trading strategy that combines 2 indicators (Bollinger bands and Turtle 20 Strategy) that are widely used by traders all around the world.

Bollinger Bands (BB) is a type of trading indicator that consists of a centerline (simple moving average) and two outer bands that represent the standard deviation of price movements, helping traders assess market volatility and potential price reversals. As a rule of thumb, the price is in an uptrend if it is above the middle line and the bands have an upward bias. On the other hand, the price will be in a downtrend if it is below the middle line and the bands have a downward bias. 

The Turtle 20 Strategy is a trend-following trading approach based on a 20-day breakout system, where traders find buy and sell entry points. Based on the strategy, traders will enter long positions (buy) when the price breaks above the highest high of the past 20 days and enter short positions (sell) when the price breaks below the lowest low of the past 20 days, aiming to ride the trend and capture substantial price movements. The Turtle 20 Strategy is stronger when there is a clearer trend. 

The Bollinger Bands provide valuable information about market volatility, which can complement the Turtle strategy's trend-following nature. When used together, the Bollinger Bands can help traders confirm the strength of a trend identified by the Turtle 20 strategy. 

The combined strategy criteria are as below:

For BUY:

1. Price has to break above the middle line of the Bollinger Bands with an upward bias for the bands.
2. Turtle 20 Strategy shows a buy signal.
3. Stop loss when the price breaks below the middle line.

For SELL:

1. Price has to break below the middle line of the Bollinger Bands with a downward bias for the bands.
2. Turtle 20 Strategy shows a sell signal.
3. Stop loss when the price breaks above the middle line.

Both the indicator and trading strategy can be easily generated with just a few clicks on the VCPlus chart like the image shown below. 

Image 1: AUDUSD chart, 30-minute time frame

In the AUDUSD chart, I’ve highlighted 3 areas (buy signals 1,3,4) in rectangle boxes where the price breaks above the Bollinger Bands’ middle line and where there are also buy signals from Turtle 20 Strategy. As for buy signal 2, break below the middle line of the Bollinger Bands shortly after the signal is out, which will trigger the stop loss point and help us avoid losing further.

In conclusion, the combination of Bollinger Bands and the Turtle trading strategy can help traders find entry points consistently while managing risk effectively. Happy trading!

If you’re interested to try out your strategy with a VCPlus trading account, sign up now using this link: https://bit.ly/3zIdlEM