Bollinger band trading with MAs

[TalonD]

Red Prime? Several months ago Mike came up with a 14 SMA cross over of the center 20:2 boll. I demo tested it for all of Sept and it netted 2000’ish pips for the month.

Remember the multiple red MAs ? I still have those on the chart. but they are prime numbers. 3, 5, 7, 11,
they are all lwma

Why prime numbers? They have no special significance to forex, you can use any similar values or only one like the 14sma results will be similar so the exact value or values don’t really matter. lwma moves faster than sma.
I only used primes because I worked on a math project once, trying to break the record for the most digits.

[AndrewS]

The problem with bending the rule is that it only takes one time to wipe you out. Thursday was a great example. Traders who moved their stop loss or lifted it all together probably received a margin call when the JPY pairs dropped 200 pips in a matter of minutes. Those who took their predetermined loss could have made it back and more on the price action that followed the drop.

Anyone removing or moving a stop loss to the point of setting themselves up for a 200 pip loss isn’t practicing anything close to what I was talking about. The point is to get your stop loss at break even or better ASAP. Not set yourself up for a loss. That said, moving it back a little because you entered a bit prematurely is a risk you wont see me enjoy taking much, only out of “respect” for my broker’s slippage, and it sure wont be back far enough to margin out.

[TalonD]

Talon - in regards to your 1hr “Red Prime” strategy, are you trading when reds cross the center 20:2 BB, or price line. Yea, I know it’s a different strategy then this thread, but couldn’t find the answer after scrolling back page after page. Thanks!

Take a look at post 2069 to see a pic of my two different 1h charts.

[R_Carter]

I only used primes because I worked on a math project once, trying to break the record for the most digits.

Respect Mike… you lost me at Prime Numbers. :D:D:D

[TalonD]

lol there I go being a geek again. Before I picked the name TalonD I used to use GeekPrime for my sign on to various websites!
I once worked with a guy who called himself the Alpha Geek, not to be outdone, I became the Geek Prime !

[R_Carter]

lol there I go being a geek again. Before I picked the name TalonD I used to use GeekPrime for my sign on to various websites!
I once worked with a guy who called himself the Alpha Geek, not to be outdone, I became the Geek Prime !

Well I remember my kids used to watch a cartoon with a character called Optimus Prime… is that the same? Better bug out now before I lower this threads tone beyond recovery. :D:D:D

Catch you Sunday night Mike.

[sikday]

the base rule is enter the trade when all the MAs cross the center boll, which also just happens to be a 20period simple moving average. Lately I’ve also been using Heiken Ashi candles to get earlier entries and that’s working pretty good. Its not as simple as pure mechanical rules. You could program an EA to do this but it would be a long term loser. First follow those basic rules then add to that… look at support / resistance for possible turning points. look at trend lines. I currently have fan lines on the 1day chart and price has consistently followed those lines.

The problem with a moving average cross over strat is you get losses when price is in a range. So you have to learn to recognize that and either stay out or trade boll bounces. For the most part, price does two things. It trends and it ranges, and you have to recognize that and trade it differently for each.

One thing I’ll do, if it’s late, and I’ve got a good profit, I close half and move a trailing stop to break even, and let it run over night. That way I can’t loose any, and I’ll make some. Then pick it up again the next day.

It tends to flatten out or retrace some during the Asian I’ve noticed. I tend to try to trade that session actively, if you can call watching paint dry ‘active’. But thats where I tend to screw up. That’s my weakness. It’s a hard habit to break.

Thanks! I remember reading about it a while back and scribbling down some notes, but couldn’t remember the specifics.

[AndrewS]

Remember the multiple red MAs ? I still have those on the chart. but they are prime numbers. 3, 5, 7, 11,
they are all lwma

Why prime numbers? They have no special significance to forex, you can use any similar values or only one like the 14sma results will be similar so the exact value or values don’t really matter. lwma moves faster than sma.
I only used primes because I worked on a math project once, trying to break the record for the most digits.

I noticed you are in Georgia, so, greetings from Northeast Tennessee. Interesting stuff, I’d been looking for a way to incorporate the center line in Bolllinger Bands. So you wait for all 4 of these prime numbered LWMAs to cross the center Bollinger line for your signal? I’ve ran multiple moving averages before and not had much luck, to be honest, but I didn’t incorporate the bollinger MA.

[TalonD]

I noticed you are in Georgia, so, greetings from Northeast Tennessee. Interesting stuff, I’d been looking for a way to incorporate the center line in Bolllinger Bands. So you wait for all 4 of these prime numbered LWMAs to cross the center Bollinger line for your signal? I’ve ran multiple moving averages before and not had much luck, to be honest, but I didn’t incorporate the bollinger MA.

A fellow southerner
yeah, wait for all to cross. That’s the basic rule. Like I said before though, you have to use some judgment. when price starts going into a horizontal range, that’s when you have to stop following the MA crosses. It’s tricky to know when it’s going into a range like that. usually a trend will last 2 or 3 days and be worth a few hundred pips. when the center boll is steep up or down that a strong trend obviously. That’s when you’ll make lots of pips. When it’s not so steep that’s when you have to start looking for a range to begin. That’s not 100% though, sometimes center boll will turn horizontal and then price reverses direction and has a strong trend in the opposite direction or continues on it the original direction and you can miss a good entry or exit when you shouldn’t. So it’s more an art than a science.
Don’t know if I mentioned it, but I also usually have the price as a line rather than candles. That helps with your psychology because it hides the big spikes and noise of price and helps keep you focused on the basic direction of price. So this isn’t a candle pattern system, it’s just following the overall price direction.

I used to use the escalator analogy but here’s a better one.
If you go to an amusement park and look at a roller coaster… do you need indicators to know if the cars are going up a hill or down a hill?

[Shr1k]

when price starts going into a horizontal range, that’s when you have to stop following the MA crosses. It’s tricky to know when it’s going into a range like that.

That statement shows some experience. You need the ability to see what the market is doing not see what you want it to do. I will look at this strat as I have a hard time in a trend. I have a tendency to try and trade every higher high as a reversal. I am constantly getting in and out with very little pips.
Trading off the center BB in a trend has also helped me allot with this.

[SanMiguel]

That statement shows some experience. You need the ability to see what the market is doing not see what you want it to do. I will look at this strat as I have a hard time in a trend. I have a tendency to try and trade every higher high as a reversal. I am constantly getting in and out with very little pips.
Trading off the center BB in a trend has also helped me allot with this.

If the 1hr chart is trending in between the 20:1 and 20:2/20:3 then you can look to enter that trend on a retrace on the lower TFs - one way to use BBs as a trend follower mechanism. You will get in later than the 1hr crossover strat but the trend will be defined at that point.
Article here

The way to combat the ranging periods on the 1hr crossover strat is to

• either take some profit and move to breakeven and let the rest go…as Mike has said;
• recognise when the pair is ranging (a bit more difficult);
• accept that you are going to be stopped out from time to time but you trade this to get in on those big moves therefore you make a lot more on the winners.

[AndrewS]

A fellow southerner
yeah, wait for all to cross. That’s the basic rule. Like I said before though, you have to use some judgment. when price starts going into a horizontal range, that’s when you have to stop following the MA crosses. It’s tricky to know when it’s going into a range like that. usually a trend will last 2 or 3 days and be worth a few hundred pips. when the center boll is steep up or down that a strong trend obviously. That’s when you’ll make lots of pips. When it’s not so steep that’s when you have to start looking for a range to begin. That’s not 100% though, sometimes center boll will turn horizontal and then price reverses direction and has a strong trend in the opposite direction or continues on it the original direction and you can miss a good entry or exit when you shouldn’t. So it’s more an art than a science.
Don’t know if I mentioned it, but I also usually have the price as a line rather than candles. That helps with your psychology because it hides the big spikes and noise of price and helps keep you focused on the basic direction of price. So this isn’t a candle pattern system, it’s just following the overall price direction.

I used to use the escalator analogy but here’s a better one.
If you go to an amusement park and look at a roller coaster… do you need indicators to know if the cars are going up a hill or down a hill?

Yeah, part of my problem might have been the fact I was using a somewhat ‘dead’, less active/volatile pair. For some reason I like the EUR/GBP cross. In retrospect this may be why I was getting fakeouts and whipsaws more than usual. That cross was a range pair for a long time before coming alive, but, it’s my experience that it’s still a pretty dead pair at times. Could very well have been a big part of problem. I’d noticed you were using a priceline in on of your screen shots. Shocked me at first. I also recall you using the Heiken Ashi candlesticks on another I do believe. Been looking to try that out but I don’t think Marketscope 2.0 offers them. I’ll have to try them out on Metatrader a bit.

[TalonD]

. I also recall you using the Heiken Ashi candlesticks on another I do believe. Been looking to try that out but I don’t think Marketscope 2.0 offers them. I’ll have to try them out on Metatrader a bit.

I like to do my charting on metatrader, free demo from IBFX, but my live account is with Oanda. I like metatrader because that’s what I started with. You like what you learn on.

Oanda has an early open. 1:00 eastern, just made a few pips, but that was just playing around a bit.

[AndrewS]

I like to do my charting on metatrader, free demo from IBFX, but my live account is with Oanda. I like metatrader because that’s what I started with. You like what you learn on.

Yep, that’s for sure. I couldn’t break myself from Marketscope 2.0 for a while, but now, after using ACM’s demo Metatrader 4, I’m starting to see the limitations, that said, Marketscope 2.0 is a nice little setup. Doesn’t seem to give Mr. Carter too many headaches.

[Shr1k]

If the 1hr chart is trending in between the 20:1 and 20:2/20:3 then you can look to enter that trend on a retrace on the lower TFs - one way to use BBs as a trend follower mechanism. You will get in later than the 1hr crossover strat but the trend will be defined at that point.
Article here

Thanks thats a good article with some simple illustrations.
One thing I have noticed is at the end of a trend the middle BB will run into the price as PA slows down. As opposed to price moving across the BB. I may have to put a 20:1 back up on my charts to help me with trend definition.

[Shr1k]

Marketscope 2.0 is a nice little setup

I like Marketscope quite a bit. I have an Onada and FXCM account I usually chart with Marketscope or MT4. For some things I use the native Onada charts. For BB stuff Oanda’s charts are working fine for me.

[AndrewS]

I was milling around on Investopedia one day and came across a moving average you guys might like toying around with, it’s the McGinley Dynamic. My guess is some of you have likely heard of it. I was interested to get your take on it. Perhaps get some ideas on getting it and another to form crossovers during trend reversals. I’ve had it up for a couple weeks, looks pretty reliable, nothing special to it. Just another trend confirmation, but I thought you guys might get some fresh ideas from it. I think it has potential to be good in a pair with a slightly faster version of itself or another. The article on it is over at Investopedia under "The Most Reliable Indicator You’ve Never Heard Of ". Only thing is, this is for longer time frames, Hour and up, so, after seeing Mr. Carter’s use of the Daily and Hour and SanMiguel’s backtesting prowess I thought I’d toss it into a possible trial by fire.

[TalonD]

I was milling around on Investopedia one day and came across a moving average you guys might like toying around with, it’s the McGinley Dynamic.

look at my post 2069, the red ma chart, see the yellow line? that’s a variable MA, looks similar to that McGinley, I adjusted it some, see how it flattens out when price starts ranging? Of course, you can see when price is ranging anyway, but that’s kind of an extra visual aid to filter out the noise and see the real direction. just something I was playing around with, may or may not keep it.

[AndrewS]

look at my post 2069, the red ma chart, see the yellow line? that’s a variable MA, looks similar to that McGinley, I adjusted it some, see how it flattens out when price starts ranging? Of course, you can see when price is ranging anyway, but that’s kind of an extra visual aid to filter out the noise and see the real direction. just something I was playing around with, may or may not keep it.

The McGinley has some kind of smoother in it, kills the whipsaws and squiggles down bigtime. I’d like to see some of the math quizes get a crack at seeing the numbers behind the McGinley, but apparently they are lost. I may toy some with it this week and set one to the high and one to the low and see what I get, but I’m not near as qualified as some here. I like having it lurking around in the longer ranges, and think it’s got some serious potential, but it’s going to take some more experienced heads than mine to create a proper crossover for it.

[TalonD]

The McGinley has some kind of smoother in it, kills the whipsaws and squiggles down bigtime. I’d like to see some of the math quizes get a crack at seeing the numbers behind the McGinley, but apparently they are lost. I may toy some with it this week and set one to the high and one to the low and see what I get, but I’m not near as qualified as some here. I like having it lurking around in the longer ranges, and think it’s got some serious potential, but it’s going to take some more experienced heads than mine to create a proper crossover for it.

you can find the formula for Mcginley, google it. It doesn’t seem that complicated

ah nevermind google. here it is
Ref(Mov(C,12,E),-1)+((C-(Ref(Mov(C,12,E),-1))) / (C/(Ref(Mov(C,12,E),-1))*125))

I don’t promise this is the correct forumula, just something I found…

after a little further research, I think this formula is incorrect.