Got to admit I have a soft spot for them, here's a 1 min Scalp chart with 6 period Triangular moving average with +2 offset
<IMG src=http://i9.tinypic.com/4cndxrq.jpg width=800>
<IMG src=http://i9.tinypic.com/4cndxrq.jpg width=800>
Bollinger Bands
- Thread starter Spxdes
- Start date
Triangular is very similar to a simple moving average, just a slightly better curve, but almost identical if you don't have it
How does the offset work? That is (I guess) what bars are used to compute the triangular MA whose value is used to detect the crossover with the BB MA? (For my edification, formulas and parameter values would help me understand what is going on.) (Like the chart!) My thanks in advance.
-Pete
-Pete
Obvious entry cats always react to red light. as seen when the price gapped up at the open on 026-07 and went outside the upper band.
Akuma
Thank you very much Pro_Trader for that interesting distribution chart. If both positive and negative values were plotted the distribution, i'm guessing, would look more Lorentsian than Guassian. But very interesting, and surprising at the same time.
To Rhino: I'm not sure what you are driving at since we are both saying the same thing, although i'm not sure your statement regarding 50/50 probability of moving higher or lower is correct for prices away from the mean. I'll have to think about that. I was referring to what would be true on average, of course, and not what would be true for any one sample, about which nothing could be said ahead of time. In other words, if the data was distributed normally, and one knew the true standard deviation, then 5% of the price samples would indeed lie, on average, beyond plus and minus 1.96 standard deviations from the mean. I guess you were bothered by my using the word "moving". My main point was that prices of individual stocks are probably not distributed normally about the mean so that one should not state probability figures that one often sees incorrectly applied to Bollinger bands. In a nutshell, that's all i'm saying.
To Rhino: I'm not sure what you are driving at since we are both saying the same thing, although i'm not sure your statement regarding 50/50 probability of moving higher or lower is correct for prices away from the mean. I'll have to think about that. I was referring to what would be true on average, of course, and not what would be true for any one sample, about which nothing could be said ahead of time. In other words, if the data was distributed normally, and one knew the true standard deviation, then 5% of the price samples would indeed lie, on average, beyond plus and minus 1.96 standard deviations from the mean. I guess you were bothered by my using the word "moving". My main point was that prices of individual stocks are probably not distributed normally about the mean so that one should not state probability figures that one often sees incorrectly applied to Bollinger bands. In a nutshell, that's all i'm saying.
See this post in another thread:
http://elitetrader.com/vb/showthread.php?s=&postid=1355485&highlight=truncated#post1355485
The statistical distribution is called "truncated Levy flight." This was first studied by none other than Mandelbrot (of the fractal fame) back in the early 60's.
