Bollinger band trading with MAs

Beginner Questions
4748

The Stops depend how you trade, are you using Shr1ks idea or RC’s daily 2 LWMA high/low? Each calls for different means of stops. I think Shr1ks is either 20 pips or multiple trades = to -4% account balance. RC trades from outside the channel in to the middle, so that should give you and idea of the TP now base a risk:reward ratio around the TP do you want 1:2, 1:3, 1:1.5 etc.

You can probably find OB/OS on every TF but the ones I use most are the daily and above. I also think depending on the TF you should use other or multiple forms of OB/OS such as Shr1k’s method (LWMAs on the daily, and BBands on the lower TFs)

RC does use quite a few indicators to show OBOS on the daily but the most noteable for me are the 2 high low LWMAs and they seem to be used the most. As for the 20:2 on the daily I’m not sure maybe on a lower TF but I’ve never used it on the daily.

Read through RCs posts, youll find quite a few indicators that show OBOS :stuck_out_tongue:

on the first step I’m not sure who’s method your talking about but I think it is just the LWMAs, no BBand. step 2 sounds good and step three seems correct. I forget Shr1ks specific rules but I used his system for a couple weeks and made some profit off it. Just multiple OBOS conditions on multiple TFs I believe.

On the last part I believe at lowest the R:R ratio is 1:1. I dont think anyone (RC or Shr1k) is using a ratio where the stop is bigger than then TP. I think with Shr1ks he has a 4% balance for a SL and 10% gain as the TP or his pip target.

Remember Shr1k can tell you more about his system than I can :stuck_out_tongue: I’m just going off what he said on this forum, same for RC.

4749

AH man, me being thick… Cheers for that

4751

Hey john, (Merchantprince)

I’ll add my 2-cents okay? I tried RC’s 2 LWMA high/low channel and didn’t have much luck with it. I understand the concept behind the 2 LWMA high/low tunnel, trade the daily 2 LWMA in the direction of the major trend determined by the weekly and monthly 2 LWMA tunnel. Monthly down, weekly down, trade when the daily turns down too. Pretty simple and straightforward right?

Here’s where I was having problems, maybe its also where you’re getting stuck too. I don’t have the trading experience or confidence that RC has… RC sees the daily regression line wiggle down a bit and throws on a trade. I see the regression line wiggle down and start scratching my a$$ wondering what it means and what I should do next. LOL

With my level of experience, or lack of , I couldn’t find enough price action detail on the daily 2 lwma tunnel to comfortably trade it. So here’s what I’ve been playing with. Instead of the 2 period tunnel, I’ve slowed mine down to a 5 period simple ma high/low/median. A quick look at each time frame and right away you’ll see the direction of the tunnel, up, down or flat.

For example the 5ma tunnel EU, monthly & weekly have been down. Yesterday the daily 5ma tunnel started to turn down, PA broke the 5ma center line and last night started to drop through the 5ma low channel line. So now I’m looking for short trades, right? At this point I can pick my short trades on whatever time frame looks good and I’m comfortable with.

Last night I used yesterday’s daily candle for a CBL for my entry. Or, this morning I could have entered short again off the bounce of the 1h bolls mid line. But always looking to trade in the direction of the weekly and daily tunnel.

In other words, I’m attempting to trade RC’s concept of run with the daily when the daily is running in the same direction as the weekly and or monthly.

Does any of this make sense?
Don

EDIT: charts of EU weekly and daily with the 5ma tunnel

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4753

I get that orders are placed when PA is outside the channels, but how does one figure stops in these circumstances? In order to maintain disciplined MM one must have some idea of maximum loss per trade, in pips. I’ve noticed that both the system Shr1k outlined and the RC system codified some time back both do not address the matter of stop loss values. Can anyone provide advice on this matter?

As far as a pip stop goes for each trade I don’t use one. I do use a stop placed as a last resort if my broker or internet goes down. I open and close my trades when I think price will go a certain direction. I hold a trade that’s going against me if I think my original call was good maybe just a little early.

To be specific and I know this is what Merchant Prince is looking for. I trade mostly the Asian session and if E/U, G/U ,U/J or E/J get to 20 to 30 pips the wrong way I start to look for a good place to get out Or if I have plenty of risk left and I think its going to turn based on looking at a higher time frame I look for a place to enter again. This is doubling down and not a generally recommended practice for good reason. The way I deal with this is by watching my open balance if it falls below the amount I am willing to risk I close everything out and go watch T.V.

I know the idea of opening and closing trades at will and not based on a strict set of rules would drive some people crazy. When you look at charts as much as most of us do you get a feel for whats going on. Try this next weekend. look at your daily chart and draw some lines where you think the highs and lows of next week will be and note what order they will happen in.
You might be surprised how close you can predict or be way off. Thats all I am doing on any time frame I trade is trying to get the direction right before I spend my risk.

4754

This is interesting and was something that occurred to me while looking at my spreadsheet for risk: basing your SL on the possible TP and scaling it by RR ratio. Interesting.

You can probably find OB/OS on every TF but the ones I use most are the daily and above. I also think depending on the TF you should use other or multiple forms of OB/OS such as Shr1k’s method (LWMAs on the daily, and BBands on the lower TFs)

My only concern, as always with the higher TFs, is the size of the stops needed mean that one needs even larger moves to make even a decent return.

Thanks for the reply. :slight_smile:

4755

Do you just open a position with the initial target being the middle of the channel? If so, would you use that same amount of pips as an initial stop-loss (1:1 RR ratio)?

4756

I see what you are saying and it is a pretty straightforward idea, I think. So you are checking the monthly and weekly and actually waiting for the Daily to be (at first) going the other way, then opening a position when it turns back in the direction of the higher TFs. This seems to me would necessitate longer-range profit targets, along with higher SLs to allow for taking signals from the Daily candle, yes?

4757

So how many such trades do you open in a session? It seems from your earlier description you open quite a few.

As for the stops, as you know to make the risk spreadsheet work we need to know how many hits we are prepared to take and at what stop loss amount. This is at the heart of my question.

I have been terrible at managing losses up till now, which is why I am looking to trade strictly off the risk spreadsheet.

4758

Hello all,

So last night, after finding this thread, I tried out the 2 LWMA (I wish I could do it on my native OANDA platform :mad:).

I made three quick trades on the M30 to make 12 pips. :slight_smile: I am sure I could have gotten better entries and setups, but I was just seeing how it did without even trying.

And it did well. :wink:

So a question or two. R Carter, what is HA? That acronym eludes me. And do use that to try to find the high or low of the current bar? Similarly, you said you use past high low? I assume that means the previous bar, correct?

Maybe these answers are already here. If so, I apologize, but that was a lot of reading and I am sure I missed something.

4760

HA is Heikin-Ashi… it colours the candles (or in my case the bars) in the trend direction. Investopedia search will give you the details. I use HA only if I want to place a longer trend trade rather than just across the hi/ lo LWMA tunnel. On the daily TF this will usually last 1-2 weeks.

4761

HA means Heiken Ashi candles which are another indicator that are different candles that are colored to show trend direction and are calculated differently

4762

John,

[I][U][B]“longer-range profit targets, along with higher SLs to allow for taking signals from the Daily candle, yes?”[/B][/U][/I]

Not necessarily.

I think it’s about pulling back from the short-term (1h-15m) trends and seeing the big picture (daily-weekly) trends. Then trade the daily, 4h,1h, or 15m time frames but with a bias toward the big picture trend.

For the better part of the last year, I’ve been trying to squeeze out a few pips playing the PA and trends on the 1h and 15m charts, trading the shorter time frames because of my account size, trying to keep my SL tight and risk low.

I’ve been getting some winners and losers, but I seem to be doing no better than breaking even. I think lots of my bad trades have been because I was trading against the big picture trend.

Over a few weeks of watching RC trading his 2 LWMA tunnel method, I could see that he was usually trading on the side of the gods, the big picture trend.

Watching the PA on the weekly and daily tunnel, its pretty easy to see when the big players are moving and in what direction, but while I hyper-focusing on the 1h –15m charts it’s easy for me to miss the big picture trend.

Last two days on EU is a good example, the 1h & 15m PA has been bouncing up and down the bolls, but any good short entry, 1h or 15m on EU in the last few days is now into a nice profit, the gods are trading EU short.

So I guess I’m saying, the weekly and daily tunnel might be a great tool to determine what direction to trade. Then use whatever entry and SL method that are appropriate for our risk/reward, but in the direction of the big picture trend.

Later I’ll try to post my thoughts on the psychological advantage there might be to only trading with the big picture trend.

4763

Thanks. I now have some reading to do. :slight_smile:

I would also like to thank you for showing me the way of the bar. I now prefer them much more than candlesticks, mostly because it allows me to more easily see the LWMA lines. And I like the way they move.:smiley:

4765

Good short set up now on the weekly USD/CAD for a longer trade… just entered at 1.0419 at 0.1% of bal.

4767

So, you use HA on the weekly along with the 2 high low LWMAs. Since that candle you entered on was red meaning bearish you entered short at the break of the 2 high LWMA?

Correct?

p.s.

Since when scalping the BBands on the lower TFs where you trade back to the center on a flat boll couldnt you also enter in the direction price is going when it is riding the boll?

4768

I use HA, 2 LWMA hi/ lo and 2 Regression hi/lo (defualts to priceline on Metatrader).

I trade the daily and weekly as follows: If HA is green I trade long, if red short. [B]Trade one[/B]… lets say the tunnel is green/ long. Wait for PA to hit or step outside the lower 2 LWMA and go long. Same in reverse. [B]Trade two[/B]: Look for a HA colour change after a bigish trend and hop on for the ride entering as above (trade one). This is a trend/ momentum trade and will likely last a week or two. See EUR/USD on my charts now.

Re the 15m bol bounce… i think we covered that at length early on in this thread. :stuck_out_tongue:

4769

yep, i understand your strats pretty well now :stuck_out_tongue:

and im gonna have to dig thrrough the pages to find the bol bounces lol

4771

I was wondering if you could close and reverse if PA starts climbing the walls/ would that yield you any pips? or not consistently a good idea?

4773

Robert, a question about your charts. Do you in fact trade everything off one layout in Marketscope? I am wondering if you use essentially the same indicators across the TFs that you use to look for the signals off the weekly TF, then shift the charts of those pairs in question down to the daily and so on. Do you save a different layout with just the HA candles?

4774

Well, I was wondering if you have any experience doing that. earlier today at 13:22 I went long on eur/usd 5m. I now see a slight curce in the BB and know I shouldnt have gone long there but ended up closing it at -7 (including spread) on the next candle. I decided right away to reverse the position because PA was climbing the walls. Ended up with 42 pips including spread. So a net gain of 35 pips. 3.5%

worked the first time dont know how it will do overall but ill test it :stuck_out_tongue: