Yes, they can - and they do in a strong trend. You get all three elements (up, down, middle) in the same direction AND possibly tightening all while the market is running in one direction only.
Making Bollinger Band fading profitable
- Thread starter 1a2b3cppp
- Start date
Yes, they can - and they do in a strong trend. You get all three elements (up, down, middle) in the same direction AND possibly tightening all while the market is running in one direction only.
Right, they have always offered me the least in losing trades using BB overlay. That's not to say what you are doing won't make money, but for me, I only take certain kinds of signals based on losing percentages.
I stopped three years ago on what makes the most money day trading, as I only use methods that will offer the smallest losing percentages. But one still needs good money management rules on any trade signal, can't just stay in a trade forever, ANY trade needs rules of how much time to stay if the trade is going nowhere or if in the hole after so long, have to change targets to breakeven. For me, time management is huge and did much backtesting to find what is right for me as far as profitable trades. So after much backtesting, I want to capture 90% of those trades and find optimum amount of time or bars to stay in that trade, and that is whether I am in one minute bars or weekly bars. If I am not at breakeven plus one tick stop in so much time, my new target is breakeven plus one tick. And because I average down on all day trading signals at each tick against me(up to 12 levels in ES), I have to have a small losing percentage, so on a breakeven trade plus one tick, I get rid of my entire position there or 1-2 ticks from there, so on trades that don't go anywhere, I do pretty well in profits.
Took me awhile to understand what the old traders told me long ago, trading more often doesn't increase accounts as well as getting losing percentages down to very low and put on more contracts and trade less hours.
I like that last paragraph. It reminds me of the concept that getting a raise is equivalent to reducing your expenses. People always want a raise but a lot of people don't realize that they can have the same bottom line by reducing some of their expenses without getting a raise as they would have if they got a raise.
And in trading, fewer losing trades will also increase your bottom line.
5/6/2013:
First half
Second half
First half trades:
-1
+0.50
+0.75
+0.75
+0.75
-1
+1
-1
+0.50
+0.75
Second half trades:
+0.75
+0
+1
+0.75
-1
Total:
3.50
Assume 1 tick commission per trade (overestimate): 15 ticks = 3.75 points
Net:
-0.25
A more realistic ES commission is 1/2 tick per round trip which would put the net closer to 1.625 points.
First half
Second half
First half trades:
-1
+0.50
+0.75
+0.75
+0.75
-1
+1
-1
+0.50
+0.75
Second half trades:
+0.75
+0
+1
+0.75
-1
Total:
3.50
Assume 1 tick commission per trade (overestimate): 15 ticks = 3.75 points
Net:
-0.25
A more realistic ES commission is 1/2 tick per round trip which would put the net closer to 1.625 points.
Dont assume people even try to understand the math behind the indicators they work with.
All technical studies lag, because you are sampling an on-the-run pool of fixed data points that are historical. Nobody has a crystal ball that doesn't lag. Even data miners with neural net packages. Even live tic T&S data feeding into MatLab or S-Plus. If you need to predict the future with a great deal of certainty, or if your personality demands that you deal in high degrees of certainty, then trading is not the place for you to be.