MACD and Bollinger Bands Strategy – Rules, Setup, Backtest

There are some indicators you can easily combine to get the best out of the market. The moving average convergence divergence (MACD) and Bollinger Bands combination is one of the best synergic indicator combinations. You can use it to trade both a range-bound market and a trending market, depending on how you use them. Ever thought of a MACD and Bollinger Bands strategy?

The MACD and Bollinger Bands strategy refers to a trading method that makes use of both indicators in analyzing and trading the markets. While the MACD indicator is a momentum oscillator that is primarily used to analyze trends, Bollinger Bands is a volatility channel indicator that helps determine whether prices are high or low on a relative basis. The combination of MACD and Bollinger Bands may offer more insight into the current market and help predict how it could move in the future.

Related reading: – Different types of valid trading systems

In this post, we take a look at the MACD and Bollinger Bands strategy and include a backtest with specific and testable trading rules.