There are several ways you can trade using Bollinger bands and I am going to share with you the 3 ways I use Bollinger bands in my trading.
1) Forex Reversal Trading – When trading forex reversal, you should always be looking for ways to spot the correct reversal time and this is where the Bollinger bands come into action. You can make use of the upper and lower bands to help you identify possible reversal in price so that you can place a trade when the conditions are right. When the price penetrates the top Bollinger band for some time, you should be looking for opportunity to go SHORT and vice versa.
2) Forex Breakout Trading – If you are keen in trading forex breakout, you can make use of the ability of Bollinger bands to measure volatility to help you plan your forex breakout trading. First, you need to wait for the Bollinger bands to get narrow which is a sign of consolidation and this is the sign that usually occur before a breakout occurs. Next you should wait for a sudden burst of price action and you can then place a trade in the direction of the burst.
3) Forex Range Trading – You can also make use of the support and resistance formed by the two bands to help you trade the range of the market. When the market is in consolidation, you can enter SHORT when the price hits the top Bollinger band and you can enter LONG when the price hits the bottom Bollinger band.
Take note that the Bollinger bands in the higher time frame will have more weight age than those in the lower time frame.
In addition, you should never trade with simply the Bollinger bands alone and it should always be integrated with other forex indicators to better increase your odds of winning. The indicators that I usually use with Bollinger bands are the oscillator which is a good ways of confirming an entry.