Let’s hope! Happy turkey day from the states by the way!
Perfect sense, cheers!
You’ve actually cleared up one or two things about the system that I wasn’t 100% sure about. I have done some backtesting and on paper, it looks reliable on it’s basic principles. What do you think the rough overall success rate is if just trading on wicks outside the 20:2 BB’s?
I’m also using Tymen’s candlestick method which has a fantastic success rate.
That’s one for RC but remember that success rate isn’t the only thing that matters, the risk:reward counts for a lot and with the entry&exit points from this system, there is the potential for quite a few pips 
I’ve never read Tymen’s method, I meant to get round to it at one stage but I have no need to learn other methods at the moment. Maybe in a quieter month. I’m sure you will some similarity with candle formations but as used here, it’s wicks that are important, they just happen to coincide sometimes. To date, I have only every followed candle formations on the 4hr and Daily TFs.
Believe me, I’d love to do that. However, as I’m a bit sketchy on this myself, do you think we might put together a step-by-step how-to for each of those strats, perhaps over this holiday weekend? If each of the main contributors here could take a paragraph (or even better a numbered list) to describe the methods for trading each of the following:
[ol]
[li]boll bounces[/li][li]trading with the trend[/li][li]long term methods[/li][li]short term methods[/li][li]hedging[/li][li]trading the 1hr on the 15min[/li][li]exit points[/li][li]stop placement[/li][/ol]
I’ll get started –
I understand using candlestick patterns to trade back toward the center boll when price is wicking outside an outer band. In that situation stop placement is best if it outside the aforementioned wick, yes? It’s my understanding one ought wait for the trade to move in one’s desired direction at least equivalent to the amount of the SL before moving said SL to zero. Some have argued for moving the SL incrementally as PA moves, but this seems up to personal preference and may stop out good trades that need room to ‘breathe’.
For exit points, it seems we are exiting at mid boll or the far boll depending on circumstances, or taking an exit from LWMAs crossing back against us. Exit points are also dependent on S/R levels, longer term SMAs (63, 200) and any trend lines drawn. Is there more to it than that?
I’ve seen the posts on hedging but they can be confusing and I’ve generally stayed away until I see a real simplified explanation of when one ought use it. I know the debate on this matter has been heated.
Any way, I’d be happy to work on several drafts of a PDF which would comprehensively explain what we are trading here.
I’d very much want to create a document that is easy to understand, with step-by-step instructions that provide clarity to all the theory discussed here. It’s easy for the successful veterans here to breezily explain what they are doing and just focus on their tweaks and experiments as the pages fly by, but novices get lost without careful explanation of even the simplest things.
Perhaps a clear and concise PDF would address that.
I should clarify a little as I was just listing parts. Each one of those those is not a sub method of the system in itself, but it’s something you need to consider. Exit points is not a strategy. However, the exit point should be considered when you start a short term trade.
It’s probably more like:
[B]short term methods[/B]
- boll bounces 5/15min
- entry/exit points
[B]long term / medium methods[/B] - trading the Daily on the 1hr
- trading the 1hr on the 15min
- 1hr crossover (1/ trading from the middle following LWMAs or 2/ trading from the outer bollingers)
- entry/exit points for each of the above.
- hedging
[B]SR scalping[/B] (combines both of the above :)) - entry/exit points
Then you might have a section on advice:
conservative approach, trading with the trend;
counter trend trading and when not to (ie when the TF you trade is hugging the outer boll;
what to look for in bounces for SR scalps;
avoiding news.
I think this will be hard to put into 1 document, not so much the basics but as with anything it’s the [B]ifs [/B]and the [B]buts[/B] because there are plenty of ways a trade could present itself.
I put the 2:1 Bollinger on the Week, Daily, 4 hour, 1 Hour, 30m, 15m, and 5m, and at first glance it looks like it loves to be there to confirm on the second candle when a flat top or flat bottom is forming that Mr. Carter(thanks for the screenshot) pointed out. Must be in it’s nature.
Aye, i’ve learnt that R/R is hugely significant. You could make 10 pips at a 1:2 R/R and make more than you would with 100 pips at 1:1 if you risk 2% of your equity on each trade.
Tymen’s method is close to genius, it’s an absolute cracker. The downside is, there’s a lot of chart time involved and the trade openings are not exactly frequent. Hence the need for me to blend!
Guys, a PDF would be an real Godsend. If one emerges, I shall treat it as a bible!
Hi,
I apologise i reply late.I have been busy eating turkey left and right in US.
SM has addressed most of your concerns.From my little experience most new guys are struggling with the system because they dont understand what BBs are in the first place.If you look at the page 1 of this thread,you will notice that the measurement used for BBs is quiet different from what they are using now.You will see 20:1,20:3,5:1,3:1,2:1 as you browse through. You know why? There has been some improvements in these settings as outline by the authors(RC and SM)
You should be able to ask critical questions such as why these measurements are changing (Lately,RC introduces 2:1 on Daily TF).Because if you set up your trading chart on 20:2 and in few days RC introduces another measurement of 20:1,you are more likely to get confused, You know why? Because you dont understand the fundamentals of what BBs are in the first place. E.g. 20 represents period of time and 2 represents standard deviations. Standard deviation predicts how far price action will stretch before it reverses or strikes a band.Price should rarely exceed upper or lower boundaries in average trends when Bollinger Bands are set at 2 or 1 std dev,
So, a thorough understanding of basics of Bollinger Bands will give you the leeway to set measurements for yourself and back test them and trade more profitable with time.You will take your destiny by your own hands and if this thread breaks down one day,you can still trade well.
That is why i said fundamental is important to succeed.
Hope this helps.
John.
You read my mind. After seeing Mr. Carter’s setup I started wondering about the numbers behind the numbers concerning Bollinger Bands. Much appreciated and the email was recieved.
SanMiguel
I will buy the beer tonight;)
50 pips of a 5 min chart!! I feel I got lucky hitting a top and a bottom like that but I was following the system as I understand it.
Nice. Just so happened to be a bounce from the middle bollinger of the 1hr USDJPY I think, which is in line with the overall trend for that pair.
Hi John,
You're right and this is good advice. I do understand a reasonable amount about how BB's work and how to trade off them now but confess that the gap in my knowledge is definitely around the facts behind the figures. I'll do some more reading pronto!RC - a slightly illogical question for you
If you trade the Daily timed on the 1hr but the 1hr timed on the 15min, isn’t this the same as trading the Daily timed on the 15min…especially when the Daily is outside its 20:2 like this morning?
Yeah, I’m sluggish to understand, and I clearly got the ideal of having the Bollinger positions of longer time frames on shorter charts when Mr. Carter was talking about putting a 60:2, 80:2, etc on the 5m and 15m, but I’m having a bit of trouble getting just what 20:1, 20:2, and 20:3 represent in relation to the different time frames when compared to each other. This is especially relevant if someone is using Cas’s system. I’m hoping Mr. Carter is familiar enough with that system to explain the 20:1, 20:2, and 20:3 all used to together. My guess is that he is.
I’m sure RC’s is slightly different but I’ll you you my opinion in the meantime…
Cas uses the 20:3 to signal an immediate entry in conjunction with other timeframes. For example, if a few timeframes all touch or go past the 20:3, mainly from oil trading. You don’t need to use it for this method but it might help once comfortable.
Standard deviations are just statistic based models.
1 SD = 68.2% of price action
2 SD = 95% of price action
3SD = 99.6% of price action
At the simplest, price action in between the 20:1 and 20:2 indicates trending. Price action outside the 20:2 indicates overbought/oversold on that particular timeframe.
If you were trading the 1hr timeframe, you would time the entry on the lower TF, maybe 15min, but you would follow the bollingers on the 1hr chart telling you when to exit…at least that’s what I do.
You could also use the 20:1 as an exit point for your trade when using the 5min boll bouncing, eg. SELL trade from upper 20:2, TP1 is the lower 20:1, TP2 is the lower 20:2 band.
Hi Andrew
In a nutshell the 20:2 is a two standard deviation twenty period bollinger of whatever time frame you are using and measures PA volatilty. Bollinger states that 98% of the time PA will remain within the upper and lower bands. He also states the 20:2 boll is a best match over a twenty day period but thats a little too long for most of us. He also recognises that the twenty day period has been used less and less as people trade ever shorter TF charts.
Ok… The reason to have a boll band open on several TF charts is as follows. If your say trading the 15m chart and PA steps outside of the boll but doesnt step back in and starts to run down or up the side of the bollinger then that TF chart boll is no longer a reliable indicator of when PA will reverse. So you look to the next TF chart… is PA still inside the boll?
Yesterday and today are prime examples. I trade the daily but fine tune entry/ exits on the 1h. PA went through the 1h the 4h and the daily. On the daily it wicked and we are around the lower boll. I had an order set up for a long at the the lower boll ( 1.6372) wich has been triggered. This is why even if you trade the 5m or 15m you should keep longer TF charts open in order to get an idea of the likely range that PA will go and perhaps as importantly, where PA is now in relation to the longer term charts.
The 20:1 is one standard dev and the 20:3 is three standard dev. These can be used to gauge PA volatility with your TF chart.
Just read SM’s reply… I think between the two posts you got a pretty full answer.
Yes. 
But I seperate the trades. I look to the 5m or 15m for either very short trades within their respective boll bands or the 5m and 15m timed on the 1h for perhaps a slightly longer trade. I look to the daily timed on the 1h for longer trades.
[B]Andrew[/B]
Simply put, trade within the TF chart your comfortable with guided by the boll for that period and keep one eye on the angle of the everall boll band and use a suitable stop for that TF chart. You can look to the longer TF charts to gauge where PA is in relation to those TF’s to better understand the longer term direction of PA.
Those two posts clearly confirm what I did know and filled in nicely what I didn’t. That said, Let’s say I have 20:1, 20:2, and 20:3 open on the 5m, 10m, 15m or 15m, 30m, and 1 hour time frames. Where is the 20:3 on the 5m going to be on the 10m or 15m? or the 20:3 on the 15m going to be on the next size up, the 30m, or even the 1 Hour? …I get my question from the 60:2 on the 5m being the 20:2 on a 15m. Three steps up, this I can understand clearly. 3 x 5m = 15m, 3 x 20:2 = 60:2, simple enough for me to apply it wherever needed. It’s the above mentioned I’m sluggish to understand.
It’s always going to be an approximation because of the averaging of the periods but it’s close enough to be a good guide.
You take the timeframe you are looking and apply it to a lower TF.
So on the 1hr we have a 20:2 but we want to see this on the 15min chart.
60/15 = 4. 4x20periods = 80. This is why the 15min chart has an 80 period boll on it to simulate the 20 period on the 1hr.
The deviations you just change accordingly. 80:2, 80:1, etc.
I’m not sure why you would want to go the other way round but same principle applies.
Where is the 20:3 on the 5m going to be on the 10m or 15m?
5/15 = 0.33
0.33 * 20 period = 6.66 period boll on the 15min chart is the 5min one
or the 20:3 on the 15m going to be on the next size up, the 30m
15/30 = 0.5
0.5 x 20 periods = 10 period bollinger on the 30min signifies the 20 period on the 15min chart.
Hope that makes sense.