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Method BB

  • #1
  • First Post: Feb 1, 2007 3:59pm Feb 1, 2007 3:59pm
Hmm... I'm really pumping out the different methods these days ... This method looks to be very profitable and safe for those of you who are risk adverse. It is based upon Bollinger Bands, and I may get to posting backtest results very soon. I'm not sure if anyone has done anything like this before, but I haven't seen it around so I'm guessing not.

Enjoy,

Kevin
Attached File(s)
File Type: pdf Method BB.pdf   168 KB | 6,512 downloads
  • #2
  • Feb 1, 2007 4:48pm Feb 1, 2007 4:48pm
Results for GBP/USD for the past year are VERY impressive!

It would net 5630 in GBP/USD alone.

Check out the backtest:
Attached File(s)
File Type: pdf MethodBBbacktest.xls.pdf   13 KB | 2,487 downloads
  • #3
  • Feb 1, 2007 6:54pm Feb 1, 2007 6:54pm
Interesting method with pretty graphs. Quick question. Does an "Allstar bar" trade have to touch all the lines with only one bar? What if the top band is penetrated by, say, two bars?

Also, in your backtest, did you take into account "weak" trades, such as the third green candle and the third red candle, both in your second graph?

I like this method a lot because of its simplicity. I will do some backtesting over the weekend. Have you tried in on any other pairs? I would assume the BB band settings would have to be different on less volatile pairs.

Thanks!
  • #4
  • Feb 1, 2007 7:28pm Feb 1, 2007 7:28pm
Kevin:

For your settings, 20 is the period but is the second value the shift or deviation? There are three settings for the BB's. I think these are deviations so the shift should be left at zero...aye?
  • #5
  • Feb 1, 2007 7:42pm Feb 1, 2007 7:42pm
yeah, i think that is the case since he mentions deviations in his document.

Just looking over the graphs without testing yet, it looks like GBPJPY might be a heavy pip-earner too for this system.
  • #6
  • Feb 1, 2007 8:20pm Feb 1, 2007 8:20pm
Can't say I've seen many Bollinger systems here. Looks interesting. I may be able to find something to add to my own three bollinger system (20,2; 10,.8; 10, .1). Thanks for posting it.
Quoting kharvell
Hmm... I'm really pumping out the different methods these days ... This method looks to be very profitable and safe for those of you who are risk adverse. It is based upon Bollinger Bands, and I may get to posting backtest results very soon. I'm not sure if anyone has done anything like this before, but I haven't seen it around so I'm guessing not.

Enjoy,

Kevin
  • #7
  • Feb 1, 2007 8:22pm Feb 1, 2007 8:22pm
Quoting Lamdun
Interesting method with pretty graphs. Quick question. Does an "Allstar bar" trade have to touch all the lines with only one bar? What if the top band is penetrated by, say, two bars?

Also, in your backtest, did you take into account "weak" trades, such as the third green candle and the third red candle, both in your second graph?

I like this method a lot because of its simplicity. I will do some backtesting over the weekend. Have you tried in on any other pairs? I would assume the BB band settings would have to be different on less volatile pairs.

Thanks!
The graphs ARE rather pretty! An "All star Bar" has to be ONE bar that touches all the lines. Otherwise, don't act upon a trade, even if it is touching 5 lines.

As far as weak trades, I treated them as normal trades, and some turned out to be profitable still. To answer your question, there were no entries that were excluded.

I have briefly looked at other pairs, and all seems to be well. Since the BB's use standard deviations, it is automatically reflected in them with different pairs because BB's use the price history of each currency.

Quote
Kevin:

For your settings, 20 is the period but is the second value the shift or deviation? There are three settings for the BB's. I think these are deviations so the shift should be left at zero...aye?

I must apologize for OANDA's cheap charting platform. BB's only have 2 settings on Oanda ( Period, Std Deviation). Leave the shift at 0.

Quote
Can't say I've seen many Bollinger systems here. Looks interesting. I may be able to find something to add to my own three bollinger system (20,2; 10,.8; 10, .1). Thanks for posting it.

Glad you have found it useful! Hope everything works out.

Good luck,
Kevin
  • #8
  • Feb 1, 2007 9:34pm Feb 1, 2007 9:34pm
On the second orange arrow on page 5 of the PDF you state:


"Maybe a sell, maybe not. In my opinion the price should definitively close in the main channel."

Didn't price close in the main channel on that candle? In which case, you should have gone short there, which resulted in -100.
  • #9
  • Feb 1, 2007 9:55pm Feb 1, 2007 9:55pm
Quoting aegis
On the second orange arrow on page 5 of the PDF you state:


"Maybe a sell, maybe not. In my opinion the price should definitively close in the main channel."

Didn't price close in the main channel on that candle? In which case, you should have gone short there, which resulted in -100.



I suppose it depends on your meaning of definitive. Personally, that is just barely closing below, and is not quite convincing enough for me to
1) exit existing trade or
2) take a whole new position upon it

Hope this is clear,
Kevin


Also, Lamdun,

I believe pairs that have great variations in BB widths will be the best. For instance, all the BB's will go from really wide to narrow and vice versa quite frequently. A good example of good pairs would be USD/JPY, USD/CHF, AUD/JPY, GBP/USD, EUR/USD etc. Not so much GBP/JPY because if you compare its widths to the others, the others are relatively better. This is not to say that this system wouldn't profit off of GBP/JPY, just a matter of observation.
  • #10
  • Edited 12:41am Feb 2, 2007 12:26am | Edited 12:41am
Kevin,

Maybe I'm just having a really S-L-O-W thinking day, but I'm hoping you'll do a "Dummies Guide to Method BB" and clarify your entry & exit rules for this method.

Let me see if I can summarize it & then you can correct me where needed:

A trade entry is signaled when price leaves the
resistance bands and closes in the main channel.

The trade is active until:
1. The 100-pip stop loss is hit OR
2. Price travels through the main channel into
the resistance bands on the other side of the
channel and then finally returns to the main
channel, at which time a new trade is signaled.

Is that the idea? If so,I have a couple of more questions:
1. You refer to the all-star bar in your third graph as
"a very good sign to buy". If I understand the
entry rules correctly, wouldn't you have already
been in a buy position in that example? Are you
actually referring to adding to the position?
2. You suggest a stop loss of "100 pips and stay there
until you get an exit signal." I'm assuming you
mean to adjust the stop loss daily to 100 pips as
the trade progresses . . . is that right?

Thanks for the help!
Greetings from Guanajuato, Mexico
  • #11
  • Edited 12:48am Feb 2, 2007 12:40am | Edited 12:48am
Hi Yen ,

The answers are within text in RED as usual.
Quoting yen44x
Kevin,

Maybe I'm just having a really S-L-O-W thinking day, but I'm hoping you'll do a "Dummie Guide to Method BB" and clarify your entry & exit rules for this method.
Nahhh you don't need the dummy guide... I'll try to straighten you out
Let me see if I can summarize it & then you can correct me where needed:
A trade entry is signaled when price leaves the
resistance bands and closes in the main channel.
Correct
The trade is active until:
1. The 100-pip stop loss is hit OR
Correct
2. When price travels through the main channel into the resistance bands on the other side of the channel
WRONG!!!!!! : MOST of the time the price will travel across to the other side through some bands on the other side. After it is done flirting with the resistance and closes back in the main channel, THEN you will close out your position AND start a new one in the opposite direction. It works in a cycle. HOWEVER, sometimes the price will bounce off the invisible 1 Std. Deviation line and not come back. These are tricky and may be best to stay away from. Depending on how good your candlestick analysis is should decide on whether or not you take these trades.

If those conclusions are correct, I have a couple of more questions:

Shoot away, my friend!


Thanks.
Quote
1. You refer to the all-star bar in your third graph as
"a very good sign to buy". If I understand the
entry rules correctly, wouldn't you have already
been in a buy position in that example? Are you
actually referring to adding to the position?
Yes, it would be an addition to your position by a full lot of whatever it is you're trading. There may be times though when you are not in a position already, and you see this. You will definitely want to take advantage of it.
2. You suggest a stop loss of "100 pips and stay there
until you get an exit signal." I'm assuming you
mean to adjust the stop loss daily to 100 pips as
the trade progresses . . . is that right?
No, there will be no moving S/L on this one. It will stay back there at -100 pips even if we are up 400. You really just need to look at recent candles and their relation to the lines(whether it is closing in the main channel after resistance) and that will be your opportunity to cash in. This method THRIVES on end of the day trading, so just check your charts for 20 minutes or so at around closing time(or open) and make some trades.

Thanks for the help!
Hope I made sense, and GOOD LUCK
  • #12
  • Feb 2, 2007 12:43am Feb 2, 2007 12:43am
Quoting kharvell
Hi Yen ,

The answers are within text in RED as usual.


Hope I made sense, and GOOD LUCK
Sorry Kevin I accidentally submitted the first post prior to finishing Maybe you can take a look at post #10 for my actual questions.
I warned you it was a slow day.
Greetings from Guanajuato, Mexico
  • #13
  • Feb 2, 2007 12:52am Feb 2, 2007 12:52am
Quoting yen44x
Sorry Kevin I accidentally submitted the first post prior to finishing Maybe you can take a look at post #10 for my actual questions.
I warned you it was a slow day.
I saw that Refer to 11 for your answers
  • #14
  • Feb 2, 2007 12:58am Feb 2, 2007 12:58am
Kevin . . . thanks for the help.

I've been glancing at charts since you started the thread earlier today and this looks like a very promising system.

Well done!
Greetings from Guanajuato, Mexico
  • #15
  • Feb 2, 2007 1:08am Feb 2, 2007 1:08am
Quoting yen44x
Kevin . . . thanks for the help.

I've been glancing at charts since you started the thread earlier today and this looks like a very promising system.

Well done!
Agreed It's certainly a step up from RSI Daily Pivots. I have back tested USD/JPY for similar results as GBP/USD. Pretty much the same Win % ratio. Here's a copy for you and anyone else interested:

Attached File(s)
File Type: pdf MethodBBbacktest2.pdf   13 KB | 1,641 downloads
  • #16
  • Feb 2, 2007 3:50am Feb 2, 2007 3:50am
kharvell, u always got something in the bag. this one looks like a killer. if this thing can replicate these results in a forward test, then game over.

thanks for doing this.

Quoting kharvell
Agreed It's certainly a step up from RSI Daily Pivots. I have back tested USD/JPY for similar results as GBP/USD. Pretty much the same Win % ratio. Here's a copy for you and anyone else interested:

  • #17
  • Feb 2, 2007 5:45am Feb 2, 2007 5:45am
Thank you Kevin for sharing your ideas (I also liked your RSI Pivot Method) - great work

Well, I tried to apply the bollingers to my chart with your settings. And had to recognize that MT4 only allows full nummbers in the deviation settings and not .5 like you suggested.

Is there a variation of that indicator somewhere? I've been searching but did not find some....

Other topic:

Your method reminds me of Vegas' Wealth Builder hourly/daily method. If you don't know it have a look. It's inspiration and maybe you'll get more of ideas. I hope so because 'til now your ideas are extraordinary!
Thank you once more.

Cheers,
Freewheelin (a german in Greece - so I apologize for my poor english...)
42
  • #18
  • Feb 2, 2007 8:33am Feb 2, 2007 8:33am
Hi Kevin,

BB Method very impressive & concise it its structure. Tks for
posting. I have sent you a PM when you have time.

AceTrader
  • #19
  • Feb 2, 2007 8:55am Feb 2, 2007 8:55am
Quoting gtketum
kharvell, u always got something in the bag. this one looks like a killer. if this thing can replicate these results in a forward test, then game over.

thanks for doing this.
I try...

But seriously, I'm glad you like what you see! I was rather impressed by how effective it seems myself. The amazing thing about it is that it works on nearly every currency pair with a lot of width variation on the BB's. Also, I have been glancing at smaller time frames, and it seems to work, too! I do think that it would have a lower success rate, though

Anyway, thanks for your compliments, and good luck!

Kevin

Quote
Thank you Kevin for sharing your ideas (I also liked your RSI Pivot Method) - great work

Well, I tried to apply the bollingers to my chart with your settings. And had to recognize that MT4 only allows full nummbers in the deviation settings and not .5 like you suggested.

Is there a variation of that indicator somewhere? I've been searching but did not find some....

Other topic:

Your method reminds me of Vegas' Wealth Builder hourly/daily method. If you don't know it have a look. It's inspiration and maybe you'll get more of ideas. I hope so because 'til now your ideas are extraordinary!
Thank you once more.

Cheers,
Freewheelin (a german in Greece - so I apologize for my poor english...)

Hi Freewheelin

Thanks for you compliments, and your English is great! Meta Trader can't do something OANDA can? I'm shocked ! I don't know of any interfaces really that use .5 deviations, but there are a few java online charting programs that you could maybe use and see. Netdania and chartstation, among others. I do not know of any variations of BB's.

And in regards to the Vegas Method; it was the first method I looked at in this forum, and I think it started me on my method finding quests. Believe it or not though, THIS method was inspired by that "worthless" statistics class I had to take in college last year. I guess it wasn't so worthless..

Thanks, and good luck!

Kevin

Quote
Hi Kevin,

BB Method very impressive & concise it its structure. Tks for
posting. I have sent you a PM when you have time.

AceTrader

Hi Acetrader,

Thanks for the compliments and the PM.

Acetrader and I have talked about making an indicator for this file. Would anybody be interested in it? First of all, we have no programmer, so that's problem #1.
  • #20
  • Feb 2, 2007 9:36am Feb 2, 2007 9:36am
Quoting kharvell
I try...

But seriously, I'm glad you like what you see! I was rather impressed by how effective it seem myself. The amazing thing about it is that it works on nearly every currency pair with a lot of width variation on the BB's. Also, I have been glancing at smaller time frames, and it seems to work, too! I do think that it would have a lower success rate, though
Hi Kevin,

Let me ask you a question about your point on the width variation of the BB's. If today's candle was done right now (10:30 EST), EUR/USD & USD/CHF would each trigger a trade signal as I understand the system.

Each has extremely tight BB's right now. How would that affect your thinking on those potential trades?

Thanks!
Greetings from Guanajuato, Mexico
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