There are plenty of indicators to choose from on the Olymp Trade platform. Sometimes, it could be a good idea to combine a few. The Bollinger Bands and the RSI (Relative Strength Index) are a perfect combination that, used properly, can significantly boost your account balance.
Continue reading to know more about this powerful pair of indicators.
How to set up the Bollinger Bands and the Relative Strength Index at Olymp Trade
You log into your account, you choose the asset, and next, you set the Japanese candlesticks chart. Now you need to click on the graphical tools feature. Find the Bollinger Bands among “Trend indicators” and select it. You can change the period, deviation, colors, and thickness of the line.
You set up the RSI indicator the same way you did with the Bollinger Bands. You will find it among “Oscillators”. Here you can adjust the period, the color, and the width of the line.
The indicators are set on your chart.
To expand your knowledge of the RSI indicator, go to our guide on using RSI with support/resistance.
If you need to refresh the basic rules of using the Bollinger Bands indicator, check our article explaining how does Bollinger Bands indicator work.
Trading with the Bollinger Bands together with the RSI indicator at Olymp Trade
First, I would like to say a few words about candle intervals. My advice is to use a period of 5 minutes or longer. With too short a period, the analysis of the market becomes too difficult. The price fluctuates often and you will have to struggle to identify a real direction of the price. That is why 5-minute interval candles will be a good choice. And when you put it together with the Bollinger Bands and the RSI, you will soon become a successful trader.
What do you need to look for? One thing is to find the moments when the price is reaching the upper or the lower band of the Bollinger Bands indicator. The other is to watch for a clear direction on the RSI oscillator.
When the price cuts the lower band of the Bollinger Bands indicator, and at the same time the RSI is falling, this is a signal to enter a sell position. On the other hand, when the price crosses the upper band, and you can notice the rise of the RSI, this would be a good time to buy.
The best trading opportunities come when the price is ranging in the narrow B-Bands channel for a long time. Then, when the market decides about its direction you can expect a strong movement.
Using the Bollinger Bands and the RSI to trade long-lasting positions at Olymp Trade
Now with your indicators set, how do you use them to trade at Olymp Trade? You should look at the areas where the prices start ranging. The gap between the band’s narrows. However, the RSI indicator shows divergence. At this point, enter a long trading position.
Opening a long-lasting sell position on the Olymp Trade platform
Look at the below chart. The price was ranging for some time. Then came the moment when the price has cut the lower band of the Bollinger Bands indicator. Now, look at the RSI. The oscillator is falling in the way that you can imagine drawing a trendline on it. Based on this information, you can assume the downtrend is coming. You should definitely open a short position. I used 1-minute candles here and my trade lasted 10 minutes so it could bring me a profit.
You can notice two more possibilities to enter the trade on this chart. When the candles are cut by the indicator’s line and the RSI is still falling, open the sell position.
Opening a long-lasting buy position on the Olymp Trade platform
The bands of the B-Bands were close to each other for a period of time what meant the price was ranging. Then the RSI oscillator started to rise and eventually, the price has cut the upper band of the Bollinger Bands. You should enter the trade at this moment.
The RSI is still rising and again, you could draw a trendline on it. So when the price crosses the band once more, you can open another long position.
I was trading on 1-minute interval candles so my positions lasted 10 minutes.
Final thoughts on trading with the Bollinger Bands and the Relative Strength Index at Olymp Trade
The combination of B-Bands and the RSI shall only be used for trading the positions of long duration. When you choose to trade on 5-minute interval candles, open the trades that last 30 minutes or even more. In the above examples, I used 1-minute candles, and thus, I entered the trades for 10 minutes. Longer duration of the opened positions will minimize the risk, that the price movements that occur in short periods will affect your trades.
You can freely adopt the strategy of using the B-Bands and the RSI indicators pair to any market of your choice. I would, however, suggest to use it on the currency pairs markets. They are sensitive to the news releases and before it happens, the price tends to consolidate. Thus, it gives you a good start to search for the best trade entry moment.
When you manage to open the position, wait until it finishes. Do not intervene before, because the price fluctuations may ruin your success.
That’s all from me. Now, you can hurry to your Olymp Trade demo account and practice what you have learned. After some time, you will be ready to move to the real Olymp Trade account and raise your balance.
Wish you profitable trades!
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?