I've never been a big bollinger fan mainly because I've not understood the best way to use it. I bought Bollinger's book but it didn't help that much. I'd like to see a few chart examples from you that show how you trade using it if you don't mind.
Quoting bfsDislikedFozzy,
Read your earlier posts (September) and had to tell you about my love of Bollinger Bands; for me, the “Bollingers” are a (not the) major secondary indicator. In my “method,” I use both the Bollinger Band Width and the Bollinger Percent B. Once you fully understand the beauty of the “Bollingers” and their function as LEADING indicators, you, too, will use them religiously [both are: close, 20, 2].
The BBW (Bollinger Band Width), which I standardized into a linear, non-log 0-100 scale (historic 120-bar) line tells me (confirms) THE ONLY TIME I AM EVER TO ENTER INTO A TRADE. This is on the dips, which should be optimally under .10, but, can, and will, be (much) higher depending on the selected chart’s bar period. The BBW is nothing more than an easy to read graphic rendition of the Bollinger envelopes. The dip is the set-up; the rise is the trigger. To clarify (when I say dip), the entry is (on or after) the RISE after (following) the DIP. (For me, I like displaying this as a “step” line, not a point-to-point line; I feel the accuracy is coloured, tainted and skewed by a point-to-point line.) I enter only on (at) the BBW dips (if my other indicators are in concert); once in a position – I don’t care where the BBW goes. After observing the BBW, you will see it is (can often be) an exit trade management tool. NOTE: THE DIP WILL INDICATE BOTH (EITHER) A LONG OR A SHORT POSITION ENTRY. If you use moving averages as one of your entry indicators, by adding the BBW to your arsenal, you will (if you obey the rules and your other secondary indicators agree) increase your “strength of entry direction accuracy” by 1,000 percent.
The Bollinger Percent B (%b) is very similar to what is referred to as the “moving average wave clock (PIP) angle.” Used as a histogram (base 50), it quite often leads the BBW’s dip. For me, the %b is the best strength (weakness) indicator other than volume or open interest – and, of course, in the world of forex we don’t have volume or open interest as other markets do – so I use the %b to fill that vacuum.
Happy PIPing. Hope this helps you out.
/s/ bfs
Ignored
"Though this be madness, yet there is method in it." -Hamlet Act II
