Bollinger bands

[Rossini]

I just thought I would have a go at getting a system together using bollinger bands for a short term system. Any comments or questions are appreaciated.



Trading the Bollinger bands back to the 20EMA on a 5Min view.


The price must touch or exceeded the lower or upper deviation line.

After the extreme candle that exceeds the outer Bollinger there mush be a ‘inside’ candle with a lower high if selling or a higher low if buying.

The stop loss should be placed above the bodies of the previous two candles if selling, or below the bodies of the previous two candles if buying. (above or below the wicks is better)

The candle which is the ‘trigger’ to trade (the inside candle) must be mostly black if selling or mostly white if buying (big wicks or spinning tops should be traded with caution)

The amount of points to the middle Bollinger should be no less than the stop loss- if it is then pass on the trade.

When 20pts are made on the trade move the stop loss to break even.


A much higher probability of success is on ‘inside days’ where the current range for the market is still inside the high and low of the previous day.

I have not tested this live but I may start today only trading £2pp.

 

[Rossini]

I forgot to say, settings for the bollinger are Nbr periods 20, standard deviation 2, exponential and apply to close.

 

[Gumping]

Favour a particular pair - or just looking to take a signal anywhere?

I've made pips trading BB's on EUR/USD after about 10pm when it hits a pretty tight range. Once the range is established it's a pretty decent, simple strat imo. Just having a 2 yr-old means I don't often stay up that late!

Have fun

 

[Rossini]

I was looking to trade this on about 5 or 6 markets.

Todays results where-

+8
+21
+22
+16
+13
-20
+20
+6
+26

Total +112 pts for the day. My target was 50 points for the day but I decided to continue as I wanted the practice. There where some signals I didn’t take as the trigger candle had too big a wick, which for me indicated that the bears (if I was bullish) where too strong.

Every day will not be as good as this one. But what I have done today is show that the forward testing matches the back testing, this has always been a problem for me, but using this method gives me confidence to continue.

 

[Gumping]

:cheers:

Good first day. Keep up the good work

 

[Doctor Leo]

There where some signals I didn’t take as the trigger candle had too big a wick, which for me indicated that the bears (if I was bullish) where too strong.

From that, and also from the description of your system given above I can assume that it's discretional trading anyway. Not good for me, but maybe it works for you. Only be cautious.
Also, could you please be a bit more formal in the description of the entry pattern — I mean, to avoid emotional notions like "too big" or "too small", to be more precise; and of course I can't understand how you exit a trade, maybe I've missed something?

 

[hwsteele]

Yes a more distilled version of the rules would be nice, but from the looks of things it could turn out well. May fortune be yours with this system!
Please keep us up to date with your results.

 

[gonnamakeit]

cool..nice post..thanks for sharing....which market or markets were teh above results on....also please continue to update on ure results

Cheers Dude !

 

[Rossini]

From that, and also from the description of your system given above I can assume that it's discretional trading anyway. Not good for me, but maybe it works for you. Only be cautious.
Also, could you please be a bit more formal in the description of the entry pattern — I mean, to avoid emotional notions like "too big" or "too small", to be more precise; and of course I can't understand how you exit a trade, maybe I've missed something?

I wouldn't call it discretional. I have another system that is discretional but this has set rules for entry and exit so its mechanical.



Ok look on a 5 min chart yesterday at 16.05 and 17.25 there are two entrees here and one false one at 16.25, this does not qualify because the low of the trigger candle (the white one) is lower than the one that touched the bollinger (the black one). I traded the 1st of these three and then went home. Exits are simple (although that is the problem I have allot of the time on my discretionary system- I tend to get into the right trades but just take profit too early!) I am exiting when the price touches the centre bollinger or 20EMA from either direction. Or exiting when stopped out with a small loss. I like this method primarily because I can exploit our true advantage as a retail traders over the banks, we can choose to stay out the market!

 

[Gumping]

Ok look on a 5 min chart yesterday at 16.05 and 17.25 there are two entrees here and one false one at 16.25

A 5m chart of what?

I had a quick look at EUR/USD last night after reading your results - looks like the Inside Candle provides an excellent filter to get rid of the big trending movements which would wipe you out.

For exit: Do you use the 20EMA, the centre Bollinger (which from memory, is more like the 20 SMA....?), or whichever is hit first? Or something else?

Good luck with today's trades :clover:

 

[gonnamakeit]

yup chart of what pair?

 

[timsk]

I just thought I would have a go at getting a system together using bollinger bands for a short term system. Any comments or questions are appreaciated.

Hi Rossini.
This thread may be of interest if you haven't seen it yet, as well as the thread linked in my post #4:
http://www.trade2win.com/boards/forex-strategies-systems/39278-bollingerbands-intraday-strategy.html
Good luck with your strat'
Tim.

 

[Rossini]

yup chart of what pair?

It might help if I added that! Aud/Jpy is the pair I was refering to. Yesterday I traded Aud jpy, Gbp jpy, Eur usd and Gbp usd. I focused on these because as a rule of thumb I dont like pairs that are very wicky- I find them less reliable. So far today its going ok, I will post the results when I finish or reach my profit target.

 

[Rossini]

Ok, I missed out on a few good trades today, however we still ended the day in profit-

+9
-9
+23
+13
+4
+11

Total +51 points

There was a great trade that I missed on the Gbp Jpy at 12.30 I would have made 42 pips. Ya can't get them all....

 

[Rossini]

Today was a so so day for this. Still we ended the day slightly up. I think I should have a go at letting profits run. Has anyone any I ideas on how to do this?

-16
+10
+9
+5
+0 I lost my nerve and got out early, I could have had +16
-25
+26

Total +9 pts

Avg win so far is 12.5 pts
Avg loss so far is 14.8 pts

Tot wins is 17
Tot loss 4

This is the reason for my question. I think I need to let my profits run more. Any ideas anyone? I know 3 days of live testing does not mean much but I will keep going....

 

[Gumping]

This is the reason for my question. I think I need to let my profits run more. Any ideas anyone?

Errrrrrr.......dunno

Start trailing the stop when you hit the EMA?

Plot a narrower BB (Maybe 1 standard deviation?) and exit at the opposite edge of this band? (Or maybe exit half at the EMA and move stop to there, target the other half to exit at the opposite BB)

errrrrrrrr......

It's difficult to come up with something that keeps the method simple, which is the beauty of what you're doing IMO.
Of course I'm hardly a seasoned trader so I might be a bit light on knowledge here and not much help.

I should add though, that it looks as if you're doing fine as you are

 

[Rossini]

Today was a good day! The huge fall we had on cable presented some nice buy trades for us. Aud jpy was nice to trade also. The gbp jpy had some signals but the price although it went the right way from entry, did not touch the center boll. However I took us out with a v small profit and didnt let the trade ride back into loss.

+5
+1
+12
+27
-17
+1
+6
+20

+55 pts in total. I increased the size of my trades to £5 per pip today, as I am getting more confident trading counter trend.

I used the bollinger as a guide to buy gbp usd 7 pips from the low earlyer on tonight. I didnt include it in the results because I left it to run once I had moved my stoploss to breakeven. I trailed my stop on this trade and got taken out with +29 pips @ £10 per pip.

 

[hwsteele]

Sounds like it's working well for you so far!

 

[timsk]

Hi Rossini,
Well done on your results so far.
Just wondered how you decide where to place stops on the few trades that went against you? With trend trading, stop placement is relatively straightforward as one may conclude that the point at which one's stop is hit the trend is likely to be over. However, with a reversal strategy such as this - the reverse doesn't apply. The more price extends beyond the Bolly Band, the more overbought / oversold it is, and the point at which one exits the trade to close for a loss is - in my experience - the optimum point to enter the trade for an excellent profit. It's a bit of a catch-22, IMO; ideas anyone?
Cheers,
Tim.

 

[Rossini]

Hi Rossini,
Well done on your results so far.
Just wondered how you decide where to place stops on the few trades that went against you? With trend trading, stop placement is relatively straightforward as one may conclude that the point at which one's stop is hit the trend is likely to be over. However, with a reversal strategy such as this - the reverse doesn't apply. The more price extends beyond the Bolly Band, the more overbought / oversold it is, and the point at which one exits the trade to close for a loss is - in my experience - the optimum point to enter the trade for an excellent profit. It's a bit of a catch-22, IMO; ideas anyone?
Cheers,
Tim.

If I am looking to buy gbp usd, then the stop will be below the low of the trend down. So say the price spikes past the lower boll and reaches 1.6994 then retracts back inside the boll, it has a 'inside' candle that closes at 1.7022- my stop would be placed below the low at around 1.6992

This gives me a stop of 30 and a target of 45 ish pts. This was a trade this morning at 9.45am but I missed it.

I think using this method the stops are very easy to place because if the low/high is broken then it is probable that the trend has not reversed and will continue- therefore you are in the wrong trade.