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BB on Steroids

  • #41
  • Apr 20, 2007 8:00pm Apr 20, 2007 8:00pm
Hi Kharvell,

It's great to hear that it can be of use! Both yourself & many other traders have helped me out immeasurably. While I have looked at & tested many systems & moved on, the knowledge gained in relation to indicators & the market has been invaluable!

Kudos to all of you who share your hard work and insatiable appetite for this thing called trading!!

And I should add, Kudos to the creator & admins of FF for making this such a valuable community experience.

Derek




Quoting kharvell
Derek,

I've looked into the use of stochastics as a filter, and have put a few indicators into it in order to capture the long-term, and short-term trends. I am very pleased with the results. Just when I thought my method couldn't be better, I think it just got better. I think the best way to do this will be to create a pdf real quick. And I know some of you will say "He's adding SO many indicators", but I think it's beneficial in terms of taking quality, winning trades.

Expect the pdf sometime today or maybe tomorrow(let's not get too ambitious

Regards,

Kevin
  • #42
  • Apr 20, 2007 10:18pm Apr 20, 2007 10:18pm
I did up a (relatively) quick chart showing how I am using this system!

Note that you do not need the divergence or ADX indicators. I am using them mainly to strengthen my position when they confirm the same entry as bollinger and stoch.

Entry:

1. Candle closes in the open after either being in the bands, or bouncing off of the bands.
2. Weekly stoch has consolidated or crossed over in the direction of entry.

Bonus Confirmation:

1. ADX has turned down after being above 50 - this shows change in direction of trend.
2. ADX is below 20 and is starting to move up (especially if it crosses the 20 heading up). This signifies a strengthening trend.
3. The previous divergence bar shows an arrow going in the direction of entry.


Initial Stoploss Options:

1. As per original BB rules - 20 day ATR's value up to a maximum of 100.
2. 10% of ATR below/above entry candle's low/high. This will give you a greater s/l on the more volatile pairs but in many cases will keep you in the trade better.

Exit Options (do your own diligence to see which method suits you - best method may vary by pair):

1. Weekly stoch closes & consolidates or crosses over.
2. ADX is above 40 and turns over showing a change in trend.
3. At close of every daily candle, move stoploss 10% of ATR below/above previous candle's low/high (acts as manual trailing stop).

That's about it! The chart should explain the rest...


Be aware: No system is perfect! The majority of them give up pips somewhere during the trade! Get over it!

D.

Standard Disclaimer: Anybody utilizing any of my methods or advice is crazy! You do so at your own risk!
  • #43
  • Apr 21, 2007 7:43am Apr 21, 2007 7:43am
[quote=Daemien;278628]I did up a (relatively) quick chart showing how I am using this system!

Entry:

1. Candle closes in the open after either being in the bands, or bouncing off of the bands.
2. Weekly stoch has consolidated or crossed over in the direction of entry.


quote]

i love the idea of using the weekly stoch for entry confirmation. i've been using the original BB method for the last month. the CAD has been horrible and so has the G/j. i'll look to see if the weekly stoch would have prevented entry.

Can you post the indicator that places the weekly stoch on the daily chart. much appreciated.

Pipette
  • #44
  • Apr 21, 2007 11:24am Apr 21, 2007 11:24am
kharvell,
Dunno if this was asked of you yet, but I was wondering how your experience with Oanda has been.
  • #45
  • Apr 21, 2007 11:49am Apr 21, 2007 11:49am
Quoting Daemien
I did up a (relatively) quick chart showing how I am using this system!

Note that you do not need the divergence or ADX indicators. I am using them mainly to strengthen my position when they confirm the same entry as bollinger and stoch.

Entry:

1. Candle closes in the open after either being in the bands, or bouncing off of the bands.
2. Weekly stoch has consolidated or crossed over in the direction of entry.

Bonus Confirmation:

1. ADX has turned down after being above 50 - this shows change in direction of trend.
2. ADX is below 20 and is starting to move up (especially if it crosses the 20 heading up). This signifies a strengthening trend.
3. The previous divergence bar shows an arrow going in the direction of entry.


Initial Stoploss Options:

1. As per original BB rules - 20 day ATR's value up to a maximum of 100.
2. 10% of ATR below/above entry candle's low/high. This will give you a greater s/l on the more volatile pairs but in many cases will keep you in the trade better.

Exit Options (do your own diligence to see which method suits you - best method may vary by pair):

1. Weekly stoch closes & consolidates or crosses over.
2. ADX is above 40 and turns over showing a change in trend.
3. At close of every daily candle, move stoploss 10% of ATR below/above previous candle's low/high (acts as manual trailing stop).

That's about it! The chart should explain the rest...


http://www.cfmortgages.ca/pics/bollinger%20bands.gif


Be aware: No system is perfect! The majority of them give up pips somewhere during the trade! Get over it!

D.

Standard Disclaimer: Anybody utilizing any of my methods or advice is crazy! You do so at your own risk!
Derek,

I've gotten a brief chance to look this over, and it has a lot in common with what I came up with. Instead of using weekly stoch's, I am adjusting the period to be a sort of "sudo-weekly stochastics" The parameters I have chosen are (25,15,15) on the daily chart using your rules above. Also, I have put a Williams %R (Period 20) (Above 50=Long,Below 50=Short). The ADX is good and all, but I don't think it's necessary(just my opinion). Anyway, thanks for sharing the idea of using longer-timefram stoch's! Can't believe I didn't think of it myself!

Quote
kharvell,
Dunno if this was asked of you yet, but I was wondering how your experience with Oanda has been.

My experience with Oanda, is overall a positive one. Overall, my orders are placed promptly, they're honest with their spreads, and the bottom line is I have nothing else to use since I have a Mac. My only problem with them(and they're really not that bad) is that their servers disconnect every so often(usually weekends, but sometimes early Friday's). Other than that it's all good. I especially like their sub-account feature; allowing me to hedge if I really want to.

Hope this helps; if you have any more specific questions you come up with, I could probably tell you more.

Regards,

Kevin
  • #46
  • Apr 21, 2007 6:59pm Apr 21, 2007 6:59pm
Kharvell,
As i'm sure you know there is mention over at Spud's site in post #470 about rsi(3) with 80/20 levels. I have been looking at that, along with the 5,3,3 sto for the GBP/US using your method. Please take a look. When the rsi(3) closes from <20 to >20 = signal and from >80 to <80 = signal. Then when 5,3,3 sto kisses or crosses = exit. And of course, looking a your BB method the whole time.
I think there is something to it that can benefit your method somehow.
  • #47
  • Edited 10:53pm Apr 21, 2007 10:04pm | Edited 10:53pm
Quoting drayco
Kharvell,
As i'm sure you know there is mention over at Spud's site in post #470 about rsi(3) with 80/20 levels. I have been looking at that, along with the 5,3,3 sto for the GBP/US using your method. Please take a look. When the rsi(3) closes from <20 to >20 = signal and from >80 to <80 = signal. Then when 5,3,3 sto kisses or crosses = exit. And of course, looking a your BB method the whole time.
I think there is something to it that can benefit your method somehow.
Hey drayco,
You must have read my mind, man. I had thought of using (5,3,3) stoch's to exit only hours before you mention it here. I have made a PDF explaining how I will trade BB on steroids with stoch's. We miss out on a lot of trades, but I believe accuracy will be improved to a point where we could use tons of risk in every trade. This is NOT FINAL by any means. This is merely what I have come up with for now, and is awaiting more backtesting.

Regards,

Kevin

Here's the PDF file with stochastics:
Attached File(s)
File Type: pdf 9TradesWithGBPUSDStochs.pdf   219 KB | 1,556 downloads
  • #48
  • Apr 21, 2007 11:04pm Apr 21, 2007 11:04pm
I think since the new set ups put you in at a nice spot, one could use 50 pip S/L's and do fairly well. I might just do 70 to be safe. The point is that you can risk less pips and gain more from big swings. I am thinking 3% risk per trades at 50 pip S/L risk would be rather nice when we get those 500 pip trades.
  • #49
  • Apr 22, 2007 8:10am Apr 22, 2007 8:10am
Quoting kharvell
I think since the new set ups put you in at a nice spot, one could use 50 pip S/L's and do fairly well. I might just do 70 to be safe. The point is that you can risk less pips and gain more from big swings. I am thinking 3% risk per trades at 50 pip S/L risk would be rather nice when we get those 500 pip trades.

just looking at the weekly stochs would have saved me from the usd/cad and the gbp/jpy using the old BB method the past month. i'd prefer less trades with higher probability of success. and like you said, with this filter, we'll be able to look at more pairs with a tighter stop. i may still use the ATR for now but observe the actual retracements to finetune the stops

Pipette
  • #50
  • Apr 22, 2007 8:44am Apr 22, 2007 8:44am
Quoting kharvell
I have made a PDF explaining how I will trade BB on steroids with stoch's. We miss out on a lot of trades, but I believe accuracy will be improved to a point where we could use tons of risk in every trade.


Here's the PDF file with stochastics:
Hi kevin

i'm looking at your document and i'm a little confused. What is the definition of a blue signal? i thought a blue signal is when the pair closes above the blue line but doesn't touch the white line. or is any close above the blue line a signal to enter long? vice versa for short?

Also, trade 5 didn't close in the channel but was still within the bands. wouldn't the next day's close have been the correct time to enter? Same goes with #6,

thanks much

Pipette
  • #51
  • Apr 22, 2007 11:04am Apr 22, 2007 11:04am
Quoting pipette4x
Hi kevin

i'm looking at your document and i'm a little confused. What is the definition of a blue signal? i thought a blue signal is when the pair closes above the blue line but doesn't touch the white line. or is any close above the blue line a signal to enter long? vice versa for short?

Also, trade 5 didn't close in the channel but was still within the bands. wouldn't the next day's close have been the correct time to enter? Same goes with #6,

thanks much

Pipette
Hey Pipette,

I think you may be muddling the two signals together too much when they are in fact very seperate. Blue signals require you to solely focus on the blue bollinger band. If the price closes to the outside of the channel, you have a blue signal. The same goes with white signals. If the price closes inside the channel after having touched a white bollinger band, then you have a white signal. It's important to note that in each case we are talking about a seperate channel; one for blue and one for white. While these are both seperate signals, the only time it should get confusing is when we get both a blue signal AND a white signal. And for that we will let our stochastics tell us what's up.

Now the above should generally help you out, but here's the answers to your specific questions:
Quote
Also, trade 5 didn't close in the channel but was still within the bands. Since the trade signal is a white signal, we only focus on the white bands. Using only the white channel, the price DID in fact close in the main channel. Always remember that they are seperate wouldn't the next day's close have been the correct time to enter? Same goes with #6, Hope this helps

Good luck,

Kevin
  • #52
  • Apr 22, 2007 11:57am Apr 22, 2007 11:57am
Kevin,

Thanks for the updates. Wouldn't the green candles around November 8th qualify for long trades. Stoch is up and the candles closed outside of the blue bands coming from the inside? Also, just to verify, those are daily charts with weekly stochs at the bottom? Thanks - Hoss
Life is too short to have anything but delusional notions about yourself.
  • #53
  • Apr 22, 2007 12:42pm Apr 22, 2007 12:42pm
Quoting kharvell
Hey Pipette,

I think you may be muddling the two signals together too much when they are in fact very seperate. Blue signals require you to solely focus on the blue bollinger band. If the price closes to the outside of the channel, you have a blue signal. The same goes with white signals. If the price closes inside the channel after having touched a white bollinger band, then you have a white signal. It's important to note that in each case we are talking about a seperate channel; one for blue and one for white. While these are both seperate signals, the only time it should get confusing is when we get both a blue signal AND a white signal. And for that we will let our stochastics tell us what's up.



Kevin
So to summarize, and to make sure i understand, a blue signal is when the daily candle closes above the blue BB (which is the 1.0 std dev) for a long

the white signal is when price has touched the white BB (1.5 std dev) and closes below the white line. For the white signal, i disregard the blue BB.

I hope this is correct. And thanks for answering my questions.

Pipette
  • #54
  • Apr 22, 2007 1:51pm Apr 22, 2007 1:51pm
Just posting a potential set-up in the EUR/AUD. The 25,15,15 is still down and we have a daily candle closing to the downside outside of the blue band. Outside of Kevin's rules there are other factors that may make this a good trade - nice tails on the preceding candles, it's with the trend, and the 5,3,3 is about to cross to the downside. Any thoughts are welcome.
Attached Image
Life is too short to have anything but delusional notions about yourself.
  • #55
  • Apr 22, 2007 4:56pm Apr 22, 2007 4:56pm
Quoting hoss
Just posting a potential set-up in the EUR/AUD. The 25,15,15 is still down and we have a daily candle closing to the downside outside of the blue band. Outside of Kevin's rules there are other factors that may make this a good trade - nice tails on the preceding candles, it's with the trend, and the 5,3,3 is about to cross to the downside. Any thoughts are welcome.
I would say that it's going down. Of course the best time to trade would have been many days ago, when the price first closed below the white line (50,.7 bollinger) on my chart. In recent days the price recoiled to the 25 ema (heavy light blue line) and then fell again. That 's the Vegas tunnel incidentally. That most likely means based on the Cyrox averages that it will continue with the dominant downtrend, although it's a bit later than I would like to enter. I enter after the first close beyond the momentum (white) bollinger, if that is supported by the Cyrox.
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  • #56
  • Apr 22, 2007 5:18pm Apr 22, 2007 5:18pm
Quoting hoss
Kevin,

Thanks for the updates. Wouldn't the green candles around November 8th qualify for long trades. Stoch is up and the candles closed outside of the blue bands coming from the inside? Also, just to verify, those are daily charts with weekly stochs at the bottom? Thanks - Hoss
Those would appear to be buy signals at around November 8th, but the price has to move from inside the channel to the outside in order to be a blue signal. As you can see, it never enters the blue channel, and thus cannot trigger a buy signal.

These are daily charts, but I have included a longer-term stochastic(25,15,15) that is my interpretation of about a month's worth of trend. This stochastic tells us the approximate month past trend. I think it could be shortened to increase trading opportunities(i.e. (15,10,10)) But the longer-term trend is usually going to be our friend.

Quote
So to summarize, and to make sure i understand, a blue signal is when the daily candle closes above the blue BB (which is the 1.0 std dev) for a long

the white signal is when price has touched the white BB (1.5 std dev) and closes below the white line. For the white signal, i disregard the blue BB.

I hope this is correct. And thanks for answering my questions.

Pipette

This is all correct Pipette! Good jobThe only thing that has changed, is that I am now relying on stochastics. It doesn't matter whether it's blue or white(there's no predominance anymore). The stochastic will decide.

Quote
Just posting a potential set-up in the EUR/AUD. The 25,15,15 is still down and we have a daily candle closing to the downside outside of the blue band. Outside of Kevin's rules there are other factors that may make this a good trade - nice tails on the preceding candles, it's with the trend, and the 5,3,3 is about to cross to the downside. Any thoughts are welcome.

hoss and taxgeek,

I think I'm with you guys on this one. I'm thinking about a 40 pip S/L should do the trick. Good luck!

Kevin

PS Pretty rainbow taxgeek
  • #57
  • Apr 22, 2007 5:31pm Apr 22, 2007 5:31pm
Thanks for the detailed answer, Kevin! One more question. What exactly constitutes coming from inside the channel? Does the open have to start closer to the 21 sma or can it open anywhere inside the blue line, as long as it closes outside the blue line? Thanks, again.
Life is too short to have anything but delusional notions about yourself.
  • #58
  • Apr 22, 2007 6:07pm Apr 22, 2007 6:07pm
PS Pretty rainbow taxgeek[/quote]

Might as well be pretty, if I'm going to look at it everyday. I've been using this system for several months, and it gets plain boring sometimes. The cyrox helps liven things up and reveals a good bit about price action too. In case somebody wants it, I've added the template for it.
Attached File(s)
File Type: tpl CryoxMMA.tpl   10 KB | 480 downloads
  • #59
  • Apr 22, 2007 7:15pm Apr 22, 2007 7:15pm
Quoting kharvell
Hey drayco,
You must have read my mind, man. I had thought of using (5,3,3) stoch's to exit only hours before you mention it here. I have made a PDF explaining how I will trade BB on steroids with stoch's. We miss out on a lot of trades, but I believe accuracy will be improved to a point where we could use tons of risk in every trade. This is NOT FINAL by any means. This is merely what I have come up with for now, and is awaiting more backtesting.

Regards,

Kevin

Here's the PDF file with stochastics:
In trade #6 I do not see the price hitting the white Bollinger Band line. So it is not a short signal?
  • #60
  • Edited 1:45pm Apr 23, 2007 1:17pm | Edited 1:45pm
First of all, thank you Kevin for sharing your BB strategy with all of us. I think it's going to bring us all plenty of pips over the coming months!

With regards to Cable's daily chart, would it be safe to assume that I can short Cable as things currently stand? I mean, what could change b4 the close now that the market usually quietens down in the after-market.The 25.15.15 stochs look ready to cross. We have a white sell signal.What do you think of this set-up?

Also, I don't know if anyone read Philip Nel's thread (4hr MACD), but I've noticed that BB on steroids' signals (also 4hr chart)are almost in synch with his strategy's entry points.Go figure!! The two strategies actually seem to serve as additional filters for each other.For example ,Philip's use of moving averages could serve as additional support/resistance for your strategy.He already uses the 21SMA.These are all obviously on the 4hr chart.It's worth having a look at. I haven't backtested it yet,though and I'll keep you posted.
Last question. Would you recommend using your BB on steroids system with a 4hr or even 1hr chart, or would the parameters for entry change too drastically(in and out way too quickly) and the profit margins be a little too small?

Thanks again,Kevin.
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