Bollinger bands fibbonacci

HI !

I started a thread earlier bollinger bands plus trendline break.
Although this has potential it was too boring for me in the long run.
I like to experiment with bollinger bands alot.

The reason behind this is a well known group that has their own system based on BB. They are extremely successfull.

I will not give their name here because they were moved to commercial section and the thread did not belong to the original creators so there is copy right issue.

Anyway.


I am experimenting with fibonacchi and bollinger bands.


The idea is to draw fibonacchi retracements from the extremes of bollinger bands.

Extreme happens when the price breaks outside of the outer bands.

So lets say there is a new extreme. Price breaks outside top bollinger band for the first time after it breaks outside bottom bollinger bands.

Now we wait for a new extreme that breaks bottom of bollinger bands.

So we can draw fibo from the first extreme(top bb) to this new extreme (bottom bb).

This is where it gets experimental. I originally moved the start point of fibo (top bb) to the highest wick of the last candle before price made the second extreme(bottom bb). And I kept changing the end point of fibo everytime price made a new low at bottom bb.

I changed that: So now I keep the starting point of fibo at the top of the first candle that breaks the outer bands(first extreme) in this case top bb. And I still move the end point of fibo to the lowest candle.

Ok i do this until I get an entry triggered for my trade.


So how do we set entry, exit, breakeven and take profit? Well its still experimental but here is the latest.

First I have to say that I am trying to create a hybrid system:

What I mean by hybrid is a system that works in both ranging and trending markets.

What the system will do is switch from ranging parameters to trending parameters and vice versa as soon is we get a loss in the ranging system.

So we will start with ranging system parameters than if we get a loss we will switch to trending system parameters and if we get a loss we switch back and so on.

Why am I starting with ranging parameters? Because it gives me the most profit in the shortest time.

For now I will give quick examplesI have to eat and do something will be back)

BUY TRADES:

DRAW FIBO FROM TOP EXTREME(TOP OF FIRST CANDLE TO BREAK TOP BB) TO THE BOTTOM OF THE FIRST CANDLE THAT BREAKS BOTTOM BB
GO LONG WHEN PRICE BREAKS AND CLOSES ABOVE 23.6 FIBO
STOP LOSS 5 PIPS BELOW 0.00
DO WHICHEVER HAPPENS FIRST:
IF PRICE REACHES 1:2 RR START TRACING SL BEHIND LAST CANDLE UNTILL YOU GET STOPPED
IF PRICE REACHES 61.8 FIBO BRING SL BELOW 38.2 THAN DO ABOVE
OR YOU CAN JUST CLOSE TRADE AT 1:1 RR ITS UP TO YOU
IF PRICE GOES BELOW THE 0.00 LINE AND CLOSES BEFORE YOUR ENTRY IS TRIGGERED MOVE END POINT OF FIBO TO THE LATEST LOW AND REPEAT PROCESS.

IF TRADE IS SUCCESSFULL, NOW YOU ARE LOOKING FOR A SELL TRADE DOING THE SAME THING IN REVERSE.

IF ITS NOT SUCCESSFULL YOU WILL SWITCH TO TRENDING PARAMETERS AND DO A SELL TRADE
FOR TRENDING ALL WE DO IS USE 38.2; SO PRICE HAS TO BREAK AND CLOSE BELOW/ABOVE 38.2 FOR OUR TRADE TO GET TRIGGERED.
THE REASON FOR THIS IS IF THERE IS A STRONG TREND IT IS HARD FOR PRICE TO CLOSE BELOW 38.2 THUS IT WILL KEEP US OUT OF BAD TRADES.

THATS IT FOR NOW I WILL COME WITH MORE EXAMPLES.

Ok guys as I said in the beginning this is experimental.

So the newest experiment;

EURUSD 4hr

7 months


resulsts:

1:1 rr
390 pips no losses average pips per month 55

bring sl behind a fibo line when price closes above it or price touches the next fibo, than we wait for price to touch outer bands to close;
565 pips no losses average pips per month 80

after all above is done we wait for reversal signal to close the third trade, we dont close until we get reversal signal
1659 pips no losses average pips per month 237

Total pips in 7 months 2614 (this is of course if you split your trade into 3 portions)

I am using the same idea, drawing fibs from extreme to extreme but I changed entry and exit rules.

From what I can see if we use the third option of exiting which is reverse signal this will keep us with the long trend. Than we can use lower timeframes to trade along this trend.

For example instead of 4hr we can use 1day than go down to 4hr or 1hr to trade with trend.


Entry rule for buy:

Draw fib from high extreme(top BB) to low extreme (low BB) [if price moves below low extreme move fibo to low of that price]
now we wait for price to close above 38.2 or go half way between 38.2 and 50.0 to enter long. whichever comes first.

Stop loss: 1 ATR + 5 pips (this is for 4hr we might have to change it for lower tf)

If you decide to take 3 trades;

TP 1 at 1:1 rr

note: at this point if price closes above 50.00 or goes up and touches 61.8 we place sl for remaining 2 trades 5 pips below 50.0 fibo

TP 2 we close second trade when price touches the top bollinger bands. note: our sl for the last trade remains the same but now since price touched the other extreme (top bb) we draw a new fib to look for shorts,

TP3 after we draw the new fib looking for shorts we close our 3rd trade when we get a short signal and go short.


NOTE: I was able to ride the trend for 6 months using the 3rd exit strategy(reversal signal)


EURUSD 4HR TESTED FROM 2009 12.30 TO 2010 07.27

I will post examples, just wait

Here is a general look at the trade area

It looks a bit confusing but ask questions.

Here is a potential entry for when market opens.

I wouldnt enter this trade though because of high spreads when market opens, just showing live examples

i didnt consider when to place orders,

this is another thing to think about.

Maybe look for trades before london open and make sure that the potential pair does not have high impact news that day.

THE PURPLE LINE IS ENTRY LONG, THAN GO WITH ACCORDING TO RULES

Here is a look at eurch from daily stand point

here is a potential trade

dont trade at market open because of high spread

if there is high impact news dont trade.

here is another 1

thank you

No prob.
Let me know how you do.

Just little suggestion, if you use standard BB periods (20) maybe better if you use for Daily Chart (20 days range/1 Month). And if you use H4 Chart maybe better if you use 30 periods ( 1 week H4 range).

And sometime use BB open/close could give 'better view'.. lol



Regards
NIH

Tnx but than i have to test, and might have to change entry/exit. I will look at it but for now standard bb is working.

I dunno what you mean about BB open/close.

Standard BB use SMA close price as 'her' mid line, so you must use custom BB to use other price types or other MA method.

Trying to work out all possibilities.

what happens when we get stopped in the midlle of bollinger bands.

If we get stopped out we wait for price to touch 23.6 if it didnt already and place a pending order at the same spot as before.

If we get stopped out and price goes all the way to top bb (this is for sells) and makes a new high we change the fibo end point to that new high and place a new pending sell stop at between 38.2 and 50.0(as usual)


P.S. when you trail this sell with the fibo you will see that the sl doesnt get triggered and we do not get a buy for 1376 pips

Now we have a system where we make use of ranging market and do not miss out on the huge trend.

Tnx nih, i know this.
But there are alot of variables with my system to work out before i have to change ma period.

For example instead of using midline of 38.2 and 50.0 of fibo for entry I could use 50.0 or 61.8 etc and this will dramatically change the results.
I originaly used 23.6 for entry, this worked great and gave 1:3 rr easily in ranging market but lost 3 to 4 in a row when market trended.
I also changed starting point of fibo from dynamic to static(well almost) this allowed for better entry. 38.2 kept me out of fakeouts and kept me in the current trade during strong trends.

Yup, there many 'ways' to use BB. Just for comparison, in this bellow picture there ranging and downtrend example from EUR/GBP H4.
I use 3 standard BB with close, open, and median price.

1. BB period 30, shift 1, deviation 2.0 apply to Close, color Chartreuse.
2. BB period 30, shift 1, deviation 1.5 apply to Open color Hot Pink.
3. BB period 30, shift 1, deviation 1.0 apply to median color Gold.



As you can see, is not difficult to play with ranging or trending markets
NIH

very nice and clean system. must see reaction price when cant break top/bottom BB after extream and use fibo to buy/sell

Buy trade triggered,

for less confusion at the moment


just using 1:1 rr based on ATR

so 11 pips sl and 11 pips tp

here is another that triggered

sell


on this one I will try 0.00 as sl which is 27 pips

and tp will be 27 pips as well

I wont have time to trail and do 3 trades without a money manegement EA

So these are just experimental for demo only anyway.