Making Bollinger Band fading profitable

Quote from startraitor:

I talked to John in the early 90's after I leased his latest package. He could not trade them, got my money back.
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So he sold something he doesn't even use himself?
 
Quote from bone:

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.
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Some of you guys need to print this and place it on the wall in front of your desk.
 
My bb shorting strategy has an 87% win rate for a particular category of stocks.

I have investigated two other categories of stocks but in these categories
the number of trade possibilities are fewer.
 
May 8, 2013:

Morning:
May-8-2013-BB-fade-one-entry-1.png


+1
+0
-1
+0.50
+0.75
+0.75
+0
+0.75
+0.50
+0.75
+0

Afternoon:
May-8-2013-BB-fade-one-entry-2.png


+0.50
+0.50
+0.25
+0.50
+0.50
+0.50
+0.50
+0
+0.75
-1
+0.25
+0.75
+0.75
-1
-1

Total:
6.75

26 trades @ approximately 0.125 points per trade = 3.25 points in commissions.

Net:
3.5
 
May 9, 2013:

Morning:
May-9-2013-BB-fade-one-entry-1.png


+1.25
-1
+1
-1
-1
+0.75

Afternoon:
May-9-2013-BB-fade-one-entry-2.png


+0.50
-1
-1
+1
+0.25
-1
-1

Total:
-2.25

13 trades at approximately 0.125 points per trade = 1.625 points in commission.

Net:
-3.875
 
Quote from bone:

I find that technical studies are usually not applied correctly. John Bollinger himself will tell you that it is the price action near the edges of the bands that tells you to buy or sell. Just fading every band edge is naturally going to get painful. And JB never intended the indicator to be used that way either quite frankly. Ask him.

Think about it in a similar fashion to Market Profile. When historical price "edges" are maintained or even fail off - don't fade it, go with it. The market is telling you that a new fair value price range or dominant player control area is being or has been established.

Conversely, if the "price edge" is met ( the band ) and the market fails off away from it quite dramatically, then go ahead and fade it. Give up a little trading range in exchange for better probability and signal confirmation.

My 2 cents.
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no kidding, at one time in my youth I use to fade those bands religiously. It was a real trip trading them during an Alan Greenspan speech.

Bollinger was the one that set me on the right path

90% money management
10% reading the market

I don't use any indicators, but if I had to pick just one it would be Bollinger Bands.

If you listen to one of his lectures, it is 90% about money management.
 
Quote from 1a2b3cppp:

May 9, 2013:

Morning:


+1.25
-1
+1
-1
-1
+0.75

Afternoon:

+0.50
-1
-1
+1
+0.25
-1
-1

Total:
-2.25

13 trades at approximately 0.125 points per trade = 1.625 points in commission.

Net:
-3.875
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Be aware of data snooping bias, you don't know the real band's value until the bar closes.

By the way this is 2 lines of code to backtest with most platforms, it could save you some time.
 
sometimes, I think it is just how you read the market

there are probably only two types of traders in life

MA crossovers

and BB faders
 
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