Bollinger band trading with MAs

[SanMiguel]

As far as my 1hour strat, Robert still likes it. I kind of got away from it due to having a hard time being there to catch the crossovers and also it looses profitabilty in ranging markets. and as Robert said it takes titanium balls to hang on to some of those trades.

You still trading the Daily high/low break? Have you tested it trading the other way ie instead of the break out take the trade back down from resistance or up from support?

[TalonD]

Hi San
yep still trading it. made 30 pips last night, just barely missed making 50. looking at pivots and s/r as targets now rather than just a set amount. I’ve looked some at trading the other way. That’s Robert’s method going from the high or low back in, and Rui too with mmtt. Daily breakout happens when I’m asleep and going back in the other way happens while I’m at work (except off this week) so kind of hard to stay on top of things. But gettin there!

[SanMiguel]

Hi San
yep still trading it. made 30 pips last night, just barely missed making 50. looking at pivots and s/r as targets now rather than just a set amount. I’ve looked some at trading the other way. That’s Robert’s method going from the high or low back in, and Rui too with mmtt. Daily breakout happens when I’m asleep and going back in the other way happens while I’m at work (except off this week) so kind of hard to stay on top of things. But gettin there!

Nice…PM me the threads and I’ll have a read…

[TalonD]

hey San
Rui’s thread is the MMTT system in the holy grails section. Robert’s idea is similar but he hasn’t started a thread on it. Basic idea is put a 2ma on the high and a 2ma on the low, on a daily chart. When price moves to an extreme outside one of the MAs then trade it back in towards the middle of that channel.
Robert mainly looks at the daily and weekly and monthly, Rui instead looks down at the 5m to look for the reversal before entering a trade.

[sijeeva]

hey San
Rui’s thread is the MMTT system in the holy grails section. Robert’s idea is similar but he hasn’t started a thread on it. Basic idea is put a 2ma on the high and a 2ma on the low, on a daily chart. When price moves to an extreme outside one of the MAs then trade it back in towards the middle of that channel.
Robert mainly looks at the daily and weekly and monthly, Rui instead looks down at the 5m to look for the reversal before entering a trade.

pls give the setup of roberts method
let me try

Thank you

[TalonD]

I don’t think he’ll mind me saying this much about it. But he could fill in details and if you look back some pages I think you may find where he posted some.

basic idea is
2lwma (linear weighted moving average) based on the HIGH, and put another 2lwma based on the LOW this makes a price tunnel. Put these on a daily chart. Watch for price to move above the high 2lwma or below the low 2lwma. when the happens then trade the price as it moves back into the tunnel which it will often do.

[sijeeva]

Thanks for the information Talon D i will try

[skordo000]

Hi Robert,
I’ve been reading through this area for quite a while and am applying some of your methods that you’ve stated. Thanks for the “strategy” you’ve put in place. Would you happen to have an approximate time when you will post your Equilibrium process? Thanks in advance.

[Merchantprince]

RC, don’t know if you’ve been following Tymen’s naked trend trading thread, but what do you think of using the CBL method he describes for making entries on trend reversals? (I’ve attached it to this post if you haven’t already read it.)

I’m considering employing it for trading our reversals when price steps outside the daily channel formed by the 2-period MAs. I’m certain it would not be reliable on the 5m charts, but I’m wondering about it’s efficacy on perhaps the 15m.

CBL Entries for Naked Trend Trading.pdf (959 KB)

[Merchantprince]

I think this concept was briefly covered in Mike’s ‘Hi/Lo’ thread by D-pip. In a nutshell your looking for a break in the pattern of progressively lower lows or higher highs. Once the pattern is broken a reversal is said to have taken place. Let me know how it works out for you.

I give you credit, RC, you are a cagey one. I have phrased this question differently a couple times in this thread and you have always politely sidestepped giving me any indication of the exact method you use to determine when that reversal is taking place.

Fair enough, I shall not pry further.

[d-pip]

@Merchantprince

RC, don’t know if you’ve been following Tymen’s naked trend trading thread, but what do you think of using the CBL method he describes for making entries on trend reversals? (I’ve attached it to this post if you haven’t already read it.)

I’m considering employing it for trading our reversals when price steps outside the daily channel formed by the 2-period MAs. I’m certain it would not be reliable on the 5m charts, but I’m wondering about it’s efficacy on perhaps the 15m.

Merchantprince

I’ve been playing with some of the “old school”stuff, such as Dow’s theory, WD Gann’s swing methods, and Martin Pring’s Peak & Troughs techniques. These methods are very similar to Tymen’s CBL.

First let me say, I’m just passing along what I’ve observed over a few months, I’m in no way an expert with this stuff and open to learning more from others, so don’t be flaming me! Second, I’ve only looked at EU, GU, & AU, no yen pairs.

So to date here’s my opinions. The longer the time frames the better the ”old school”/ CBL type methods work. These methods seem pretty reliable using Daily & 4 hour bars/candles. Things seem to get more "variable" and less reliable on shorter 1h, 15m 5m bar/candles.

Let me explain what I mean when I say “variable”. My observations have been volatility changes everything. With slow markets with low volatility, as you might see in the Asian session, a break of the last two high 15m bar/candles can be a major trend changer. But in the faster moving/volatile London / New York sessions and pre-post news releases, it might take a break of the last two 4h bars before the trend changes.

So the way I see it, with the shorter time frames anyway, determining what time frame and how many bars/candles to count back might become more of an art than a science. Also you need to add some pips for the stop hunts. And again how many pips to add seems to depend on the market volatility, sometime only 3 pips, other times 20 pips or more, again maybe more art than science.

All the “old school”/CTL stuff seems to work better with EU & AU than GU. Actually, because of the volatility of GU I’m not sure anything less than 4h bars would give any reliable results, maybe GU PA is just too hot!

Unfortunately like everything in FX, one size doesn’t fit all. I feel the “old school”/CBL methods are valid techniques but also need to be studied tested and tailored for the sessions, pairs, and time frames you’re trading.

thanks

Edit: Added PS & attachment

PS Merchantprince

I thought you might like to check out the attached PDF, “Peaks & Troughs” by Martin Pring. In concept it’s very similar to the Law of Charts and Tymen’s CBL method.

Peaks_and_Troughs_Pring.pdf (181 KB)

[Merchantprince]

@R_Carter

The 2 LWMA high/ low is scalping the noise. Its inherently risky be it a 15m, 1h, 4h or day chart. This can be said though. The 15m chart will give around 3-5 very high probability trades a day. The hourly perhaps several. The shorter TF’s will be a quick in and out for 10-20 pips. I’m thinking here of the GU 15m chart. When I first used this system I waited for PA to step outside the 20:2 boll upper/ lower and wick and close. Next candle would be the entry when also wicked and PA stepped back into the boll. This still holds good but I now use the bar chart and simply enter the trade when PA steps out of the 2 LWMA in a single spike. Of course its all to the good if PA also breaks the 20:1 or better 20:2 region.

You be the judge… attached 15m GU chart with 2 LWMA H/L and 20:1 & 2.

Will need to expand to 500% for a good look.

Thank you for the reply! I see that rather than have an indicator or candlestick pattern (as I might have thought) you are going entirely by candles (now just bars, actually) wicking outside both the bolls and the LWMAs. Have you replaced the 4 LWMAs you previously featured with the 20:1 boll? Was there a reason for this change?

It seems from studying your chart there are several spots where the price bar had wicked outside the bolls. In fact, the best entries seem to be where there was a bar which wicked outside the bolls and closed in that direction (high or low), then a second bar formed - which also wicked outside the bolls - but closed back inside the bolls in the opposite direction. I hope I understand you correctly that this is what you look for.

It seems in my copy of your chart (truncated a bit and resized for space) that of the eight points I numbered the only ones that would match your criteria are numbers 1, 2 , 5 and 8. Is this correct? If I understand this correctly, having the price wick outside both the bolls is more important than the LWMAs.

Once thing I can see is that off the 15m chart these would certainly be quick, scalper type of trades, mostly good for just ten pips or slightly more.

[Merchantprince]

So to date here’s my opinions. The longer the time frames the better the ”old school”/ CBL type methods work. These methods seem pretty reliable using Daily & 4 hour bars/candles. Things seem to get more “[B]variable” [/B]and less reliable on shorter 1h, 15m 5m bar/candles.

This is a painful lesson I am learning. When you take a week like this past one where I can make a whole bunch of trades off the 5m and 15m charts and score several losses (like I do every week) – yet make one naked trend trade off the peaks and valleys on the 4H chart and clear 112 pips, let’s just say a light bulb or two finally goes on.

So the way I see it, with the shorter time frames anyway, determining what time frame and how many bars/candles to count back might become more of an art than a science. Also you need to add some pips for the stop hunts. And again how many pips to add seems to depend on the market volatility, sometime only 3 pips, other times 20 pips or more, again maybe more art than science.
I agree with this, as well. Whether it’s Tymen’s CBL or trading off peaks and valleys, I am always remembering now to add in the cushion of at least the spread… and often more.

I am curious to ask Tymen (as time goes on) how he came to the three bars as the arbitrary number for the CBL. But then we see this with the 1-2-3 High/Lows and Ross Hooks used in naked trend trading, so there must be something of a science to it.

All the “old school”/CTL stuff seems to work better with EU & AU than GU. Actually, because of the volatility of GU I’m not sure anything less than 4h bars would give any reliable results, maybe GU PA is just too hot!
Yes, this is another issue resultant from trading the higher TFs: the necessary spreads can easily surpass 50 pips for certain high volatility pairs like GU and GJ. I find I may have to ditch my beloved guppy if I want to trade this way…

I thought you might like to check out the attached PDF, “Peaks & Troughs” by Martin Pring. In concept it’s very similar to the Law of Charts and Tymen’s CBL method.

We are on the same wavelength! I spent all last weekend reading up on naked trading in anticipation of Tymen’s conclusion. I found this thread on peaks and valleys (troughs) which featured that PDF, as well the quickie (but good) one that Kevin Harvell put together (first post of the thread).

Those PDFs, as well the [B]Law of Charts[/B] PDF, has kept me very busy (and excited) ever since.

[Merchantprince]

I like this guy a quick study.

Yes exactly. I would only use the 15m TF chart purely for scalping trades of around 10-20 pips. Quick in and out trades best taken [B]when the tunnel width is => 40 pips[/B] (usually London & New York open).

That is another nice tidbit of information, thanks!

I was thinking perhaps of a two-lot strategy (if tunnel width would seem to allow it) - targeting 10 pips on one trade then, if successful, moving SL on the 2nd to BE and going for either 20 on the other lot or…

The 1h TF chart 2 LWMA H/L can be used in a different way. The PA extremes are good entry/exit when riding a trend. The peaks and troughs that D-pips PDF so clearly explains. Say as now on an upswing trend (ON THE HOUR CHART). The 2 LWMA low is a good point to get in if you missed the longer turn or close out for zeds and return the next morning/ afternoon etc. Conversely you might consider getting out temporarily at a LWMA high spike and waiting to get back in at the low.

Brilliant, brilliant! Using this as a means to jump into an already-established trend is a very nice piece of work. I believe in the version of your chart I attached such a place would indeed be Point 8. If this were part of a trend on a higher TF chart, one would let such an entry established on the 15m continue to run as part of the higher TF strategy.

Thank You!

[Shr1k]

nice posts guys:D

This goes very nice with my wacky post weeks ago about imagining price being on the end of a spring. I always think of the idea that price never moves in a straight line on your charts but it tries to. This fits well my trading, actually its how I trade most of the time.

I look forward to your new thread RC.

[SanMiguel]

Wow… I can’t believe I finally finished reading the 380 pages…It’s been what? a couple of weeks, maybe more…I’m not sure. Anyway, too tired to make any coherent reply, but I do have a couple of questions…
This thread contains invaluable gems all through it, but they’re hidden in almost 400 pages. SanMiguel made a very good work of summarizing the (at that moment) current methods on the first pages, but the last edit was made back in November. Since then a lot of modifications have been made. I recall reading at some point a post suggesting the creation of pdf files. I think this is a great idea, and I’m willing to spend some time on the creation of these files, but first we need to identify all, or at least the most important systems that have been mentioned, and then ask the poster (Mr Carter, San Miguel, TalonD, etc) for the current rules.
Out of what I can recall I gotta check back, there may be more I remember

1- Talon D’s LWMA 1hr crossover
2- R. Carter daily 2&4LWMA with hedging on retraces
3- Matt’s (R.Carter’s son) 15m/5m following the 1h/4h trend
4-San Miguel’s flat Bollingers

I’m currently through my “understand, back test, forward test and choose” strategies phase, still on demo but hoping to go live somewhere in the next few months, so I think devoting some time to prepare a document where entries, exits, TPs, SLs etc (a complete strategy) are defined would be very beneficial for my own learning process. If the document can be used by others, even better.

Do you think this is a good idea?

If you have any comment, please let me know.

ah, btw, obviously any document would have to be proof-read by the creator of the system. English is not my native language, and my trading experience is meager, so I wouldn’t want to post any unreviewed doc

What I will do at some point is go back and shortlist all the key posts into an FAQ on the front page…just give me a bit of time…

[SanMiguel]

[B]TREND FOLLOWERS[/B]: Look to both the 15m and 1h charts and open trades when the green line crosses the red. Close trades when the green line crosses the yellow’s. When Yellow lines are broadly horizontal. Dont initiate a trade… wait until a clear direction becomes clear.

Trend trading at its purest will follow the above rules and disregard whats going on within the 2 LWMA High/Low PA action (the scalpers domain) instead relying on this noise to become filtered into the MA lines Green, Yellow and red. However you can with a not inconsiderable degree of experience and practise actively manage the trend trade. (Don’t if you haven’t one, preferably both).

Am I correct in thinking that we could use the 20:2 as the stop loss area. The 20:2 defining the probably range of the price at that time.
For example (click thumbnail):

[TalonD]

Looks interesting Robert. I’ll be testing it out

[SanMiguel]

San nice to touch base again its been a while no.

I have deliberately left SL trailing or otherwise out of this because I don’t use them. Thats not to say they cannot or should not be used just that I have not calibrated or factored them in. This is why I have suggested those wishing to try this strat might do so for a week in demo without a stop. They should be able to quickly see what sort of a stop is needed generally and by using the 2 LWMA H/L more precisely. I think your idea is good but might frighten a few as it would equate to upwards of 50 pips looking to the last two crosses. One solution of course is to trade it at maybe half of the usual lot size so in real terms you’d be risking 25 pips of ‘old money’.

Its also worth looking at only entering the trade after the green/ red crossover. By that I mean wait until the 2 LWMA low after the cross reverts to the high and then taking the short trade in this case. I would not advocate taking the trade after the green/ red cross at the bottom of the 2 LWMA. For instance I actually entered the short trade on the quicker 15m chart after the cross of the green & red when the zigzag of the 2 LWMA retraced back up to the high at 1.5275. (see attached chart).

What I do know is that I have been forward testing this strat since last September and it is pulling in huge pips. It’s a take on Mikes 1h cross over strat but with a different mix of indicators for an earlier gauge of PA direction and to render it still profitable in times of ranging markets (the previous big killer of its profitability).

Yes, definitely.
I have been very busy over the last few weeks though not trading FX all the time and when I have been it has only been on the Daily charts…
Been trading EU, GU, Gold, Oil, FTSE & SNP - just a few

Look forward to throwing this up on some charts.
Out of interest, do you reckon the averages would ever have to be changed to adjust to new market movements…say every few months to finetune?

[hellogoodbye4201]

Yay got something new to try out lol.