Compound Bollinger Band Range Tactics

[Wide Tailz]

Chartists, have you ever wondered if the bollinger band may be used as a guide for buying the retracement during a trend? How about using them to decide if a trend is even there?

I've wondered this since my first month trading, when I watched my positions get checked by the bands on many occasions, yet other times they would rip thru and bend the bands as if not even there.

Someone a while back posted that if you put may bands with different parameters over the chart, "magic" would happen.

Being eternally curious, I did just this:

Here's an idea that I haven't tested, but it may be worth looking into:

1. BB in 10, 20, 30 & 40 lengths all with the 2 std dev setting.

2. When upper and lower band bundles are compressed, do nothing.

3. When upper is compressed but lower is open, buy retracements at the band levels

4. If price breaks thru upper compressed bundle and bends it, long with full size

5. Take profits when upper and lower bundles are both compressed

6. Risk stop below furthest band (typically the 40 sma band)

Your thoughts?

 

[toc]

good observation, but can you explain it with specific couple of signals on the chart. too many lines make eyes go awry.

 

[abattia]

Assuming by “compressed” you mean that all the lines either above or below bunch together …

3. When upper is compressed but lower is open…
… price is keeping at a level relative to each SMA (i.e. 10, 20, 30, 40) that is towards the upper end of “average” range during the preceding 10, 20, 30, 40 bars, etc ... So it’s in a steady uptrend across all these periods… so good to be long?

4. If price breaks thru upper compressed bundle and bends it …
… perhaps it’s the size of your chart (or my eyesight!), but I don’t see this happening anywhere here (that is, if you mean a complete breakout from all the BB bands). To me such a breakout would mean a very sudden, sharp move upwards… perhaps not a good one to chase due to risk of exhaustion of the move …? Perhaps it’s too late to be long at this stage?

5. Take profits when upper and lower bundles are both compressed…
… assuming we both mean the same thing when we refer to “compressed”, if both bundles are compressed it means that price has been moving steadily in the same direction for a period of time longer than the longest period you are looking at (here, 40?). So one viewpoint would be to get on board, and go with it if that direction is up or down, no?

6. Risk stop below furthest band (typically the 40 sma band)…
… Your chart shows just the Upper and Lower bands, and not the SMAs, right? So in “6” don’t you mean “40 period Lower band” (rather than “40 sma band”)?

 

[baggerlord]

It would be simpler to just identify a trend and then buy the standard deviation pullback. Do you really need all those bands to show a trend?

 

[oldtime]

Best advice on the board about ta is from another poster who calls himself Handle123, he showed in his example how he used ema.

for those of us that traded es exclusively, it got to the point where there was no need to look at any technical indicators, since we followed every tick and already knew what they were going to look like.

I really like bollinger bands, especially if you are trading a new vehicle

if you have listened to any of Bollingers lectures, at least half, if not more is on money management

getting back to Handle123, he shows how to use any indicator to your benefit. The idea is to become intimate with the study, don't mess with the values, and notice any discrepencies.

I came up with some rules to trade Bollinger bands and just about lost my shirt in 15 minutes when Allan Greenspan was going on and on in his vauge fedspeak.

I like Bollinger bands, but I don't like rules. Like the man (Ed Seykota) said, "Rules are just a device to help you ignore everything you are incapable of or simply just don't want to deal with."

I would advise you give up your stupid idea and simply pick some values for your BB don't mess with them and learn how to read them.

 

[eurotrasher]

Quotes from oldtime:

One thing I've noticed about myself. I don't really want to trade. I just want everything to be the same all the time and I can put it on and have faith because it has been backtested I don't need to worry about it.

Do any of you idiot nerds work on systems that constantly evolve.....?

Edge? well this is where you and I part company. I don't use an edge, I rely on luck.

you ain't going to make it very far in this business if you only devote 12 hours a day to it.

Once I thought I knew what I was doing, but it turned out I had just stopped learning.

I would advise you give up your stupid idea.

keep babbling.

 

[clacy]

By the time it's apparent that the lines are compressed/trending, it's probably too late to capitalize on it IMO. That is often the case with indicators

 

[oldtime]

Quote from eurotrasher:

keep babbling.

thanks for keeping track

I'll contact you when the doctor tells me it is time to start writing my autobiography

speaking of auto, the evolving system is starting to show some progress

otherwise, luck will always be a truth which stands the test of tiime

should I notify you before I am going to post? or are you comfortable just devoting your life to following me around?

Like the man said, "Most babes when they are speaking wisdom are just babbling."

 

[Eight]

a man with two watches is never sure of the time....

 

[abattia]

Quote from Eight:
a man with two watches is never sure of the time....

... but his estimate may be closer to the right answer than the man with just one!