Daytrading bollinger bands set up

[Klockmiller]

Hello,
I am new to daytrading and i am looking for advice on a BB set up. I use 1 min charts for analysis but dont watch every minute.. i have a sound trigger for larger time frame buying/selling volume.
When price tags band (Regular BB default), MFI 10 (80/20 settings) confirms overbought/sold and VIX (my sentiment indicator) confirms reversal with RSI 7 overbought/sold.
I'm not trying to scalp only capture of a few points. And of course always have a 2:1 reward:risk.
Am I missing anything? Can anyone think of anything else that could be useful with this kind of set up?
Thank you!

 

[wackypete2]

What are you trading? Your setup would probably work better with individual stocks or commodities rather than an index.

Did you try this in a demo? That should help you test your settings.

Peter

 

[amit1986]

Bollinger bands, fibonnaci's, stochastics, MACDs, etc...are, in my opinion, rubbish. They won't give you an edge in the markets. Think about it: if there were parameter settings for these studies that allowed you to rake in consistent profits, in whatever market, day after day, then wouldn't everyone be using it? If everyone would be using it, then the opportunity for profits would disappear.

If you are day trading, learn how to read price action. Understand where supply/demand is; try to understand bid pressure and ask pressure on level 2.

Over time, as you start to see high probability patterns, you'll develop the skill to make consistent profits.

Don't waste your time with the other over-used (and abused) studies. I honestly don't believe they can give anyone an edge.

 

[Klockmiller]

Futures- ES.
Combined what i've learned about BB and threw the VIX in there for sentiment confirmation on that index.
I've demo'd it just curious if any experienced trader can see anything lacking with this/anything that could give a better read on buy/sell.
Thank you!

 

[88bluegt]

Indicators and such are not there to predict the market they are there to assist in confirming what yo THINK you already know. I don't think telling a beginning trader to not pay attention to bollinger bands, macd, etc. is such a great idea. Also, you say to try and understand bid pressure, etc. There are indicators to help confirm this and follow trends, don't see how they are useless?

 

[amit1986]

Because these are lagging indicators - they simply won't allow you to develop an edge. On the other hand, with reading price action, you can often see what is about to happen BEFORE it actually happens. Sometimes you will be wrong, in which case, you can get out for a small loss.

Why do most beginning traders lose money? Because they use indicators like these and think that since they are so popular, they must work. But since most traders lose money, following conventional systems/indicators won't help in any way or form.

Thus, it is a perfect idea to tell a beginning trader to not waste their time and money on using these indicators.

 

[Klockmiller]

Amit1986- do you have any recommended readings/books, etc I can look so I can learn to read level II data? I use TOS/Ameritrade (now one) so i assume i can access this info through them

 

[Klockmiller]

Indicators and such are not there to predict the market they are there to assist in confirming what yo THINK you already know. I don't think telling a beginning trader to not pay attention to bollinger bands, macd, etc. is such a great idea. Also, you say to try and understand bid pressure, etc. There are indicators to help confirm this and follow trends, don't see how they are useless?

Hello,
I've done a LITTLE research (and i clearly need to do a lot more) on this today. It seems level 2 can be very useful to demonstrate bid pressure, but my indicators confirm with set up.
I only daytrade s&p futures (i only have $10k account). Do you know if level 2 is useful for futures? I cant find anything about how to read level 2 on futures.... do you perhaps know of any literature that can explain this?
Thank you for your time

 

[jd1888]

Hello,
I've done a LITTLE research (and i clearly need to do a lot more) on this today. It seems level 2 can be very useful to demonstrate bid pressure, but my indicators confirm with set up.
I only daytrade s&p futures (i only have $10k account). Do you know if level 2 is useful for futures? I cant find anything about how to read level 2 on futures.... do you perhaps know of any literature that can explain this?
Thank you for your time

I believe that it is called time and sales for futures, so maybe check that out instead.

 

[Splitlink]

Indicators and such are not there to predict the market they are there to assist in confirming what yo THINK you already know. I don't think telling a beginning trader to not pay attention to bollinger bands, macd, etc. is such a great idea. Also, you say to try and understand bid pressure, etc. There are indicators to help confirm this and follow trends, don't see how they are useless?

BBs are useful to me. They do, after all, tell when a share is over bought/sold. Price action beyond the bands is more significant than when it is nearer the average. Therein lies a problem, though. What average are you going to select?

You'll have to sort it out for yourself, I'm afraid. Reading books and these posts might give you an idea what to look for but it is your decision, in the end.

BTW, Averages on 1M charts will be all over the place and so will the Bollingers. I advise Bollingers on higher TFs, they are more stable.

 

[amit1986]

Split is right. At the end of the day, you have to find what works for you. If you cannot understand how to read order flow and you prefer to use BBs, then go ahead. It will take considerable research and analysis to find parameters that work well, though.

As for reading order flow, I am not sure with regards to futures. I don't trade futures so any advice I could give you is pointless. Best of luck!

 

[jlh]

Bollinger bands, fibonnaci's, stochastics, MACDs, etc...are, in my opinion, rubbish. They won't give you an edge in the markets. Think about it: if there were parameter settings for these studies that allowed you to rake in consistent profits, in whatever market, day after day, then wouldn't everyone be using it? If everyone would be using it, then the opportunity for profits would disappear.

If you are day trading, learn how to read price action. Understand where supply/demand is; try to understand bid pressure and ask pressure on level 2.

Over time, as you start to see high probability patterns, you'll develop the skill to make consistent profits.

Don't waste your time with the other over-used (and abused) studies. I honestly don't believe they can give anyone an edge.

I've been trading two inverse ETFs for the last 18 months. I started by reading many books, trying a variety of indicators (all lagging of course) so I threw those out. I trade FAS and FAZ. I am an old guy so following Level II or BOOK is just too much visual action (for me it's just noise) but I feel it is likely essential for consistent, profitable traders like yourself.

I am using Stops that vary between .1 to .2% of equity and get stopped out frequently. I know I can increase the Stop %s but that may only increase the Stop losses.

I like what you say about price action and learning to trade from that. I do have a Trading Plan and rules with Trailing profits from 1X to 8X times an adjustable % of daily ATR but what I really lack are better entry tactics.

Any suggestions?

 

[timsk]

I like what you say about price action and learning to trade from that. I do have a Trading Plan and rules with Trailing profits from 1X to 8X times an adjustable % of daily ATR but what I really lack are better entry tactics.

Any suggestions?

Hi jlh,
Welcome to T2W.

Amit hasn't been around for a while - so you may not get a reply from him. Can I suggest you start a thread of your own - outlining what you're doing currently - and then members can offer suggestions for improving your entries?
Cheers,
Tim.

 

[MastaFX]

Because these are lagging indicators - they simply won't allow you to develop an edge. On the other hand, with reading price action, you can often see what is about to happen BEFORE it actually happens. Sometimes you will be wrong, in which case, you can get out for a small loss.

Why do most beginning traders lose money? Because they use indicators like these and think that since they are so popular, they must work. But since most traders lose money, following conventional systems/indicators won't help in any way or form.

Thus, it is a perfect idea to tell a beginning trader to not waste their time and money on using these indicators.

i agree with you. i had lost almost $1000 when using the BB trading strategies. Finally I found that using the price action + classical support & resistance is more reliable and profitable. I still use this strategies until today.

for me, BB is very2 best to use for scalping. for swing i'm not recommended. it will 'swing' you back. finally you lost all the profits you just made. haha..

 

[Splitlink]

i agree with you. i had lost almost $1000 when using the BB trading strategies. Finally I found that using the price action + classical support & resistance is more reliable and profitable. I still use this strategies until today.

for me, BB is very2 best to use for scalping. for swing i'm not recommended. it will 'swing' you back. finally you lost all the profits you just made. haha..

I feel, in answer to your post, that so will anything else. A Bollinger tells you that the price is, relatively, overbought/oversold to that average. I use it on those considerations-

Although I have regretted it many times I believe that, over the long haul, a carefully calculated stop loss distance, based on what has happened on previous occasions, is the way to handle this. For entries, Bollinger, Fib, support, resistance or your grandmother's birthday are all arbitrary entries that should work but don't always.

The moral is---Watch your @rse.