Last Updated on February 24, 2025 by Arif Chowdhury
Ever felt stuck in the market, watching price movements but unsure when to jump in?
You’re not alone.
Many traders struggle with breakouts, especially when the market gets choppy.
But here’s the good news: there’s a powerful strategy that can help you spot those critical moments when the market is ready to move.
Let’s dive into The 100 SMA + Bollinger Bands Squeeze Strategy.
What is the 100 SMA?
The 100 Simple Moving Average (SMA) smooths out price data over the last 100 periods.
It’s like a safety net, helping you understand the trend direction.
- Bullish Trend: Price is above the 100 SMA.
- Bearish Trend: Price is below the 100 SMA.
What are Bollinger Bands?
Bollinger Bands consist of three lines:
- The middle line is the 20-period SMA.
- The upper and lower bands are set two standard deviations away from the middle.
These bands expand and contract based on market volatility.
When the bands narrow, it signals a potential breakout.
This is known as the Bollinger Bands Squeeze.
Combining the Two
Now, here’s where the magic happens.
By combining the 100 SMA with the Bollinger Bands Squeeze, you can pinpoint breakout opportunities.
How It Works
- Identify the Squeeze:
- Look for when the Bollinger Bands tighten.
- Confirm with the 100 SMA:
- Ensure the price is above the 100 SMA for bullish breakouts or below for bearish breakouts.
- Wait for the Breakout:
- Enter the trade when the price breaks above the upper band or below the lower band.
Why This Strategy Rocks
- Statistical Edge:
- Studies show that around 70% of breakouts are successful when confirmed with a moving average.
- Risk Management:
- The strategy helps you avoid false breakouts by filtering with the SMA.
My Journey with This Strategy
As a seasoned Forex trader since 2015, I’ve fine-tuned this strategy.
It’s one of many that my 16 diverse trading bots utilize, which I’ve strategically developed across major currency pairs like EUR/USD, GBP/USD, USD/CHF, and USD/JPY.
Each bot is designed to minimize correlated losses while maximizing returns.
This multi-layered diversification gives me confidence in long-term profitability.
Using only H4 charts, my bots aim for 200-350 pips, ensuring they perform excellently even in tough market conditions.
And here’s the kicker: I’m offering this entire EA portfolio for FREE.
Tips for Using the Strategy
- Stay Patient:
- Wait for the squeeze to happen before acting.
- Use Stop-Loss Orders:
- Protect your capital by placing stop-loss orders just outside the bands.
- Monitor Volume:
- Higher volume during a breakout increases the likelihood of success.
Common Pitfalls
- Jumping the Gun:
- Entering too early can lead to losses. Wait for confirmation.
- Ignoring Trends:
- Always consider the overall market trend indicated by the 100 SMA.
The Bigger Picture
Incorporating the 100 SMA + Bollinger Bands Squeeze Strategy into your trading arsenal can enhance your Forex game.
But remember, trading isn’t just about strategies.
It’s about having the right tools and support.
That’s why I’ve put together a robust portfolio of trading bots that leverage this strategy, along with others, to provide a well-rounded trading experience.
If you’re ready to take your trading to the next level, check out my 16 trading bots.
Finding the Right Brokers
The right broker can make or break your trading experience.
I’ve tested many and found the best options for you.
Check out the best Forex brokers that I recommend here: Most Trusted Forex Brokers.
Conclusion
The 100 SMA + Bollinger Bands Squeeze Strategy is a powerful method for identifying breakout opportunities.
By combining a solid moving average with Bollinger Bands, you can improve your trading accuracy and profitability.
So, gear up, keep learning, and let’s conquer the Forex market together!