Bollinger band trading with MAs

Beginner Questions
5332

The only issue with that is most of us with small accounts can’t trade with stops in excess of 100 pips

This depends on the broker you trade with. Many brokers allow nano or flexible trade sizes. With a broker that allows as its smallest trade size 1 micro lot you will need a balance large enough to keep proper MM.

RC I dont trade the daily Like you. I bailed out of USD/CAD at +2 pips:D. I have been using 2 2period SMA on high/low as my main indication of OB/OS with a few BB thrown in also. U/Cad was defiantly showing a sell to me also. The bullish $ moves that started in other pairs made me jump out of that trade. I have to say I am still looking for a good short in USD/CAD.

5334

About setting the stops at the [I]outermost[/I] band of the 2-1 bolls as a reasonable idea: have you noticed how often you’ve seen price go beyond this point in your trades?

5335

very rare to be honest.

5336

Have a look at the trending pairs Merch. The red lines are hi/lo 4 LWMA HA and the two upper lower white bands are the hi/lo 2:1 boll HA.

Notice PA when trending up or down will hit the first hi of low band and resume trend direction. Usually then breaking up to a new hi or lo dependant on trend of course. :slight_smile:

Might need to expand to 200-500%. Hope this will answer your question.

5337

I see your logic and understand it. I assume though that you would cut your losses at some point on a losing trade. Otherwise a major change in long term trend caused by say a Central Bank policy change could cause a huge loss even on a small position size. We’ve all been there. The question is, what is your pain point? How large a loss are you willing to take before closing the trade? 100 200 500 1000 pips? Or would you watch for a change in the trend you are trading as signified by an uptrend making new lower lows? I’m not trying to be a smart ass. I’m really just trying to understand where and under what conditions you would cut your losses. Perhaps it’s partially dependent on other conditions, like a major fundamental shift as in the Central Bank policy change example given above, or an acceleration of the move against you after a given amount of pips against already?

I understand much of trading is having a feel for the movement of the market and it’s often difficult or nearly impossible to boil that down to a simple formula, but any explanation of how you would decide to exit a trade going against you would be helpful. Thanks in advance :slight_smile:

5339

Thanks for the answer! I’m sure it will be very helpful to any who want to properly size their position to trade this system. As we see over and over, regardless of the system used, the most successful traders are trading the longer time frames. Wish you many good pips in the future :slight_smile:

5340

The most successful traders are those who understand how & when to play their highest probability set ups.
You can execute your set ups & manage your bets just as successfully from a 5 minute chart as you can from a 480 minute chart if you know what you’re doing & you understand & respect risk.

Just take a stroll through the [I]Technical Templates 2 & Technical Templates Continued[/I] threads to see example after example of that unfolding, a good many of them identified & presented ahead of time too.

The clear & over riding message from their work is the importance of identifying & planning your efforts based around the higher probability zones of engagement that repeat on a regular basis.
And it’s not particularly necessary to hook into a longer timeframe to achieve that objective.

5341

Generally speaking, what is the best time of day to place entry orders off the hi/lo MA 2-1 bolls? RC, which period of the trading day is working best for you?

5342

Working off the daily you obviously have a 24h tf candle/ bar. Anytime in that period the set can and does occur. The trick is to look at it as 24h and not London or New York or Asian but a collective and greater move. All the big players have offices to watch around the clock. However if it helps a little I would say most of the set ups occur after London and New York close i.e. after all the big daily moves have been played out and pushed PA to one of the high or low exstemes of a move. Often the classic set ups occur around this time and start going your way overnight during the Asian.

However it might take 1-3 days for PA to cross the 4 LWMA HA hi/lo tunnel. You can reasonably expect however for PA to cross the 2:1 Ha hi/lo boll in a 24h period.

5343

The reason I ask is an issue we touched on some time back: at the close of the current daily candle (end of NY session for us here), the 2-p MAs are obviously very close together at the start of the new candle. This would certainly not be the best time to set up entry orders as price will be moving quite a bit. It sounds like perhaps midway through the Asian session (around midnight, 7 hours after current daily candle has opened?) might be a good time to set entry orders off the 2-1 bolls.

5345

Well if your using HA 2:1 boll hi/lo as appose to daily 2:1 hi/lo it tells a different story. :wink: USD/CAD (my nemasis) looks to have topped out and I expect an immenent retrace. Using this system and I expect others, has its drawbacks. Daily after the weekend of low volume is a real bugger! I prefer to look for set ups Monday close on. With the weekly same deal close of the weekly candle bar but better hi/ lo configuration over the weekend period.

For clarification: Candle/ bar close for me is as it should be NY close.

5346

Very good point; I hadn’t considered that. I’d previously tried that by looking at standard candles; HA would have different hi/lo values not so directly tied to the open and close.

I prefer to look for set ups Monday close on.

I’d thought as much. Thanks for that suggestion.

5347

That’s great & if he’s satisfied with those objectives then that’s all that matters, but that really isn’t the point I was making in reply to Gravitons comment, nor the message that’s being transmitted from those threads if you read the material correctly.

One of the more amusing myths circling the trading forum world, & I’m sure it’s no different on here, is the automatic assumption that small or micro timeframes are really only conducive to operating scalping type strategies, generating smaller potential profit objectives, running tighter risk placement. Whilst the larger profit returns are only realistically attainable by those supposed pro traders observing, trading & managing bets via longer timeframes.

Of course, that’s complete nonsense & anyone with more than a basic awareness of how markets function know full well that timeframe deployment is one of the least important factors.

Prices react, travel & cover large mileage just as efficiently on a 5 minute chart as they do on a 480 minute chart. It’s the same movement. Profit & loss doesn’t differentiate between timeframe usage.

It’s not the chart timeframe that dictates how you get there or how long it takes you to cover large profit objectives.
The most important cog in that wheel is the location or area on the price chart that you start out from. That is the primary influence that governs your optimum risk placement in relation to your odds returns.

It’s a point that’s covered & addressed very intelligently on those threads & debunks this amusing attitude that appears to infect the popular trading forums regards profit v/s timeframe deployment.

I’m not particularly disputing that, what I am suggesting (as are the contributors on those 2 threads) is those objectives aren’t the exclusive domain of longer timeframe chart deployment.

Surely you’re not suggesting that the only traders extracting long term profits from the market, or running multi day positions are those operating out of longer timeframe charts?

5348

What I’m suggesting is using shorter time frames is inherently more risky than longer time frames, especially when coupled with larger lot sizing. :slight_smile:

If for example we look to the daily chart we can see that price will move in one direction over a 24h period, typically 70-150 pips. Now if we trade off the 5m chart the entry signals could well indicate a trade counter to that longer 24h move. It is all to easy to take a 15-30 pip trade counter to trend of the longer term direction of PA when using the 5m chart. I except that it is possible to make profitable trades off the 5m and 15m charts but what you are doing is trading the ebb and flow of a longer move. :slight_smile:

5349

It’s all an illusion…

ok that was just an old joke but seriously

If you take a 5m chart and zoom OUT as you can on metatrader then it looks identical to a 4 hour chart. So it just depends on how much detail you want to see. Do you want to see the big ups and downs or the little ups and downs?

5350

And I’m suggesting that it’s not, & it appears I’m not the only one on here who thinks so.
Lot sizing isn’t the issue. Neither is risk or position management.
The real issue lies with the psychological make up & belief structure of the trader.

A half cent stop loss trading short off 1.30 on EURUSD with a 3 handle potential profit return looks exactly the same on a 1 minute chart as it does on a 4 hour one.
The fact we might adopt slightly differing entry criteria isn’t really the issue either.

The fact I choose to size & manage the position tracking it via my 1 or 5 or 15 minute data output as opposed to you sizing & managing it via your 4 hour, Daily or Weekly view is irrelevant.

It’s all in the mind! :slight_smile:

If I’m seeking to pyramid my position based on the propensity for price to successfully negotiate yesterdays low or last weeks low, then that level will appear with as much clarity on my 1 minute chart as it will on your Daily one.

It might if you didn’t possess a tight & disciplined plan.

But if I’d already decided my risk, cost & potential profit return probabilities were higher & potentially more rewarding trading in one specific direction, why would I want to consider adopting a counter entry trade?

What does timeframe have to do with primary directional flow? It’s simply the same data viewed through different lenses.

It might be for you or someone who doesn’t possess a tight & disciplined plan, but in no way does that indicate that most successful long term pro traders generate their profits exclusively from longer term chart deployment.

Like I said, if that trader has problems controlling their emotions or weak psychological issues, then that might be an obstacle to them operating down at the micro timeframe level. But it sure doesn’t preclude a trader generating long term profits by working off sub hourly timeframes.

We’re doing exactly the same thing, difference being I’m looking at it through a different lens than the one you’re peeping through, that’s all.

Fact is, successful traders can & do operate a varied cross section of strategy outlooks that encompass the differing timeframe options. It’s not necessary to trade longer timeframes in order to generate long term profits, as the material & information on the 2 threads I mentioned earlier perfectly illustrates.

5351

I don’t believe anyone can effectively manage a 1-3 day trade off the 1m chart. :smiley:

To say ‘lot size’,‘risk’ and ‘position management’ isn’t the issue but the psychological and belief structure of the trader is heading full tilt for a blown account! Its your money… :stuck_out_tongue:

5352

And I’m finding it very difficult to believe that a professional trader worth his salt, who presumably knows his onions would assume that in order to view himself as long term successful, it would require him to trade exclusively longer term technical chart views.

But I guess it takes all sorts huh? :slight_smile:

5354

I just think it’s amazing how BP keeps banning this guy and he keeps coming back with new aliases. Pretty sad life, right there.

5355

Sure, but how does that stack up against the sweeping statement that inspired my reply to this thread in the first place? You still haven’t gotten hold of that.

I called it nonsense & what’s more I backed up my comments by directing you to at least two threads on this very forum that blew holes several meters wide in that statement.

I’d be very interested to hear where you guys are getting this information from in the first place to back up your statements regarding this assumption that long term success is only really achievable by adopting a longer timeframe view.

To be fair I haven’t had the opportunity to peruse many other threads on here, as it took 3 or 4 days to casually flip through those two, but that was enough to be able to confidently challenge the above statement.

Unless of course you view those guys down on the Templates threads as exceptions to your stats?

Anyhow we’re spinning round & round aimlessly & it appears your students are getting fidgety, so we’ll let it slide huh?

Your views are yours to own, just be careful about imposing them as hard & fast judgement calls on others. You’re dealing with a lot of naive & impessionable kids here. You wouldn’t want to close them off to other avenues would you.