The One-Two Strategy: Mean Reversion with Bollinger Bands
The "One-Two" strategy is a mean reversion trading system based on Bollinger Bands. It capitalizes on the market's tendency to return to the mean (average) after an extension. By identifying specific 3-candle patterns at the outer bands, traders can predict short-term reversals with high accuracy across M15 to Daily timeframes.
Strategy Profile
Flexibility
M15 to D1
Assets
All Pairs
Indicators
Bollinger Bands (20,2)
1. Indicator Setup
This strategy relies solely on standard Bollinger Bands. While the strategy visualizes two sets of lines (Green and Orange for visual clarity), they utilize the standard deviation settings:
- Bollinger Bands: Period 20, Shift 0, Deviation 2.
2. The "One-Two" Buy Pattern
This entry relies on a specific 3-candle sequence occurring at the Lower Band:
- Candle 0 (Setup): Wait for the price to drop into the lower band zone. Mark this candle as "0".
- Candle 1 (Confirmation): Wait for the next candle to form.
- Candle 2 (Trigger): If the closing prices of Candle 0 and Candle 1 were higher than previous lows (showing support), open a BUY trade at the opening of Candle 2.
3. The "One-Two" Sell Pattern
This entry relies on a 3-candle sequence at the Upper Band:
- Candle 0 (Setup): Wait for the price to rise into the upper band zone.
- Candle 1 (Confirmation): Wait for the next candle.
- Candle 2 (Trigger): If the closing prices of Candle 0 and Candle 1 were lower than previous highs (showing resistance), open a SELL trade at the opening of Candle 2.
Exit Strategy
- Stop Loss: Place exactly 5 points away from the High/Low of Candle "1".
- Take Profit: Variable based on timeframe (e.g., 60 pts for H4, 200 pts for D1).
- Target: The primary target is the Middle Bollinger Band (Red line). Once touched, close or move SL to breakeven.
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