Bollinger Bands Trading H1/H4/D

I use BB to trade in recent month and find it handy and suit my trading preference.

I trade BB with PA (prefer on H1/H4/D).
Popular ones are PB, IB, OB (Engulfing) and Fakey.
When trending, the middle band (20 SMA) is a key line to watch for PA.

1-line MACD is another handy indicator in my trading.
One of its popular features the divergence sign.

One simple BB trend trading method I derive is from
Using Bollinger Band "Bands" To Gauge Trends
http://www.investopedia.com/articles...#axzz1qWXjEkIl

Please exercise your own RR/MM thou I find 1:1 or 1:2 are common.

All are welcome to share and comment. Please no EA. Be polite.

Happy Trading.

Short C-J on H1 after 2 PB shown, retraced from the middle band, trending down into the lower zone; on H4 saw PB then bearish engulfing candle; on D saw MACD divergence with PA, also a PB.

Risk 22 pips and let's see how it goes.

Another short trade on NZ on H4, PB seen, and on Daily, the PA dropped from RL at the middle band 20SMA.

Risk 40 pips. Will let it run till tomorrow and see how it turns out.

the concept is actually not new and bollinger did not invent it, just takes the credit.

its perfectly common statistical tool

the mean and its deviations *1 encompass => 68% while *2 encompasses => 95% of deviations from the mean.

in a one hour chart 12,2 would give you the normal variance for 12 hours and 24,2 for 24 hours.

it makes a big assumption

1- assuming price has a normal distribution, what is my expected variance from the average.

it subscribes to the theory of mean reversion. However you have to use your knowledge of statistics and your brain to process the data, also it would be very beneficial to understand Markov, and chebyshev's inequality.

other type of charts besides candle and bar can also serve you well, but the problem is when you erroneously assume that price and fundamentals are 2 different ways of trading.

lets use some logic here.

a chart gives you the information of transactions at different prices that move the market according to liquidity right? the reason to use charts is to get a visual representation of

1) distribution
2)dispersion
3) outliers

but the reason behind those transactions, has to do with macro economics, politics, and random variances, as well as perceived weaknesses being exploited by other players.

looking at a chart with BB alone will provide you no edge, and MACD is more like a derivative, it derives its signals from the underlying price via exponential moving averages

if you want to know how to use bollinger, buy Volatility Illuminated by Mark Whistler.

Interesting to see many pairs like Gold, NZ, OZ, C-J, G-J are closed in PB on Daily.
Exited C-J and NZ for 22 and BE.

Notice an interesting PA across Yen pairs.
Last H1 long tail PB shown.
But H4 is showing PA making U-turn down into the lower zone.
Watching closely the price to break the SL.

Comment?

Noted you inputs, Killy and Redlion.

You write very well, Redlion, I wish I could. English is not my main language. You sure a good trader. Hope you can share with us often. Same goes to Killy.

Like all traders started out with enthusiasm in trading. Then along the journey, many if not all hit on bumpers and rocks, and some took the initiative to sit down reviewing their trading methods. Same goes to me.

I drop most indicators except MA, BB and MACD. I find BB and MACD are built with MA and do give some edges and potential signs to trade. Thou many do not trade with them. That's how I feel and doing fine so far after many trials.

A good FF trader has taught me this - with a proper RR/MM, say 1:2, and a simple trading method suiting himself that offering just 40% winning rate, then he would be on his journey to the wealth creation. I took this positive message.

I am not truly speaking a finance guru, nor a trading expert. So I don't complicate with noises like often with news and fundamental. I go with the above simple formula.

I do hope one day to trade purely PA.

Happy Trading.

Anyone make a EA based on this system for backtest
thanks