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Boom! Volatility explosion

The Bollinger Volatility Explosion indicator is a high quality tool for daily use. John Bollinger is of the opinion that a sudden surge in volatility, like an explosion, offers traders significant opportunities. A market moving sideways is sooner or later followed by more volatile market movements. An increase in volume indicates that the market is getting stronger. The Bollinger Volatility Explosion is a tool in the NanoTrader platform based on these observations. Traders can identify volatility surges and trade on these strong market movements.

These are the advantages of the Bollinger Volatility Explosion:

  • Precise trading signals.
     
  • Clear confirmation of trading signals.
     
  • Weak entries are avoided.
     
  • Can be combined with the traditional Bollinger bands into a complete trend following system.
     
  • Can be used in all time frames.
     
  • Can be used on all instruments.

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1. USING THE BOLLINGER VOLATILITY EXPLOSION

Trade example Bollinger Volatility explosion and Bollinger bands.

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The above example shows a 15-minute chart of the GBP future from 12 to 13 January. This trade example combines the Bollinger Volatility Explosion and the traditional Bollinger Bands. The Bollinger Volatility Explosion, as indicated by a big green bar, climbs above the significant 50% level; at the same time the market price breaks out of the upper level of the Bollinger bands. This is a clear bullish buy signal. Immediately after confirmation a long position was bought. The trader placed his stop loss order above the middle line of the Bollinger Bands. The profit target was at a price level which results in a return/risk ratio of 1 (blue lines in the chart). The profit target was reached fairly quickly.

When trading based on the Bollinger Volatility Explosion the trader should select signals during which an explosion bar and a candle with a substantial body coincide, The substantial positive candle is an indication that buyers (sellers) really have the upper hand.

Technical analysis trading: Bollinger Volatility explosion.

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This second example shows a 15-minute chart of the AUD future from 31 January to 1 February. Again the Bollinger Volatility Explosion and the traditional Bollinger Bands are used in conjunction. The Bollinger Volatility Explosion in the form of a red bar dropped below the key 50% level. At the same time the market price dropped below the lower level of the Bollinger band. This tends to be a good bearish opportunity for a short sell. When the candle closed the trader opened a short position. The trader placed his stop loss order below the middle line of the Bollinger bands. The profit target was at a price level which results in a return/risk ratio of 1 (blue lines in the chart). The profit target was also reached fairly quickly.

2. A HIGH QUALITY TOOL FOR DAILY TRADING

In general it can be said that a sudden surge in volatility as indicated by a Bollinger Volatility Explosion, is a good source of valuable trading signals. This tool provides traders with a reliable method to detect this new market dynamic early. In order to improve results the Bollinger Volatility Explosion should be combined with technical analysis stalwarts such as support and resistance, as well as any other tool which gives an impression of potential price movements.

The Bollinger Volatility Explosion is efficiently integrated in the NanoTrader and offers the trader many advantages. In the NanoTrader the Bollinger Volatility Explosion is available as an indicator and as a trading signal.


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