Keeping It Simple

Yesterday someone revived an old thread I started when I was clueless and didnt even know what a spread was or how it applied to trading and I thought about that for a while and realised how even though I knew very little at the time I was reaping in great profits with a demo account, what was I doing so different then compared to now ?

I had at the time figured out what Bollinger Bands were and had been using them to guide me when to open a position and when to close it, that was the limits of my forex knowledge and strategy.
I realised how since then I had learned a lot more and had been analyzing a lot more and making things a lot more complicated with very poor results, over a 2 week period my $150 live account was down to about $100.

So last night I decided to forget everything else I had since learned and go back to my original, niave strategy, just trade the Bollinger bands, when it hits the top line sell, when it hits the bottom line close out the order and only do that when the general trend is downwards. Vice versa if the general trend is upwards. probably the simplest trading strategy out there.
Last night I made 489 pips from 8 trades and turned my account around it is now at a more healthy $170.
Sometimes you just need to keep it simple.

Take a look at this chart:

In a ranging market, as in box 1 your strategy might work pretty well. But how do you stop yourself from blowing out your account when the situation in box 2 happens?

So do you rely on the middle band, a moving average, for the trend or do you draw a TL on a higher TF?

Because remember I said I traded like that with the trend ?
I would see the trend in your chart as downwards therefore I would have opened a sell position when the price broke the top band at around 2pm at 1.5640 then that trade would end when the price broke the bottom band in box 2 at around 9pm at 1.5540
A nice 100 pips lol
I know this method is not infallible and very naive, and you can’t just blindly open positions every time the price brakes the upper band, but if you keep an eye on the price, and the analysists forcasts to make sure your not right up on any resistance points thats going to make it whipsaw on you, and if you are prepared to let a trade “ride the wave” sometimes to quite a loss before it comes back down the other side, it worked well on my $3000 demo account I doubled it in 4 days and got it up to over $20,000 before I started the $100 live account.

I used my eyes for a trend, if I was trading on the 15 minute charts I would look at the hourly, 4 hourly and weekly chart for the trend, combined with reading forcasts from experts to make sure they think the trend is likely to continue in the short term at least for that day. I like actionforex.com for that, they have nice easy to understand analysis and forcasts.

Doesn’t box 2 represent a big payout? Sell when price hits top and close out when it hits bottom?

Yes it does, I think blackswan misunderstood my original post when he posted that chart, maybe he assumed I would have been setting up buy positions when the price hit the bottom band as well as sell positions when it hit the top band, but in fact I would only open buy positions when the general trend is upwards in nature.

That’s not to say he was wrong I know what he means, even while trading with the trend, trends can do unexpected things and you could blow your account if the price was to move a certain way and never hit the bottom band while it was lower that the original openeing price, but while doing a minimal amount of testing using trend lines i did notice it is quite rare for the price to do that my idea being as long as I have more good results than bad i should remain in profit, ummmm well, hopefully anyway.

I have recently been trading volatility. I have BB and Stochastics up as well as Parabolic SAR. Essentially I just hop on my 15min GBP/USD chart at 8am CST and buy when it hits the top sell when it hits the bottom. Patience has done me well as Monday and Tuesday I have come out +150 pips including spread. I set all my trades as Entries (shorts when the uptrend is clearing the bollinger and longs when it breaks the bottom) and set a 15 pip max profit. Is this an effective way to trade or is this essentially scalping?

My reasoning lies behind the tendancy for it to encompass someimtes up to 50 pips up and down multiple times in a 3 or 4 hour period.

He would have to exit at 5560 because price hits the bottom bb band. misses the continued down move but at the point of exit there’s no way to know that down move is coming so you have to exit by the rules. Right? So how do you know not to enter a buy at that point since you don’t know the down trend has started yet… ?

For those of you who don’t believe in trends, substitute the phrase continuted downward move. :smiley:

Well you could bend the rules a little bit and check the candle, if its indicating a hard downward move you might want to hold off a little bit on closing out the order in case it goes further lower than just breaking the band but thats all a matter of judgement.
Also as sometimes happens with me I am not watching the chart avidly enough and miss the point at which it breaks the band and catch it a couple of candles later … in that case it would have been benificial, other times when I did that the price had moved back up before I caught it and I have had to wait for the next time it came back down to get my price.

As for the downward trend, I would not have traded that pair unless I had already established the downward trend by looking at the 1hr, 4hr, Iday, and 1week charts I do this for two reasons firstly to establish a long term trend so in case I open a sell order when the top band is broken and the price doesnt break the bottom band but continues to rise for a while I can allow that one to ride and catch my price later when it comes back into line with the long term downward trend.
The other reason is to make sure the price is not reaching an extreme high or low, for instance if the last time the current price was hit was several years ago I would leave that pair alone. I dont want to trade those circumstances when at any time a sudden very big reversal is very likely, as that would be sure mess up my little 15 minute bollinger bars trades.

So how do you know not to enter a buy at that point since you don’t know the down trend has started yet… ?

.5390 is the bottom of the average daily range [ATR]
.5378 is the bottom of the range [ATR] calculated from the Daily Open
.5344 is prev. week Lo

Price failed to make a weekly lower Lo.

If price makes a weekly higher Lo it reverses.

[B]Therefore you BUY.[/B]

No squigglies & “trend” required to determine that.

Sounds like the FOREX STORE method.

The underlying concept is taken from The FOREX Store. method.
The added ATR range prints are my personal touch.

What happened this morning after Frankfurt Open with the Aussie Dollar is a classic how “trend” follower run into an ambush of the SELL Stop orders sitting outside the upper ATR daily range.

Once price broke that upper range the short orders up there got triggered & longs got knocked out.

It all ended 200 pips below where it all started 9 hours later.

Which ATR setting do you use? This one loops through ATR(2) through ATR(15) and plots a range.

I use ATR(9) & ATR(12).

If I see high Money Flow & Volume climaxes above 100% at the xtreme ranges [HiLo] I can jump off early.
It gives me the xtra buffer using above ATR settings.

On the daily chart?

ATR
Daily, Weekly & 1h

Money Flow & Volume Climaxes
15m, 1h

Interesting thread, subscribed.

Best Regards,
Matt Jones .

@SDC (or anyone else):

It’s been quite a while since the last post here: Any raves or rants about the approach to Bollinger Bands mentioned in this thread in recent times?

Any track record of strong live profitability with this simple, novel technique?

Just curious :rolleyes:

I started this thread a while ago because the bollinger band bounce method seemed to show some promise, subsequently i found it gives too many false signals and i quit using it. Maybe some more perseverence might have helped figure out what the conditions have to be for it to work well i never got that far with it though,in the end i felt like i was trying to micro analyse something in the hope of finding something that isnt there, the trouble is, there are times when it works really well, its hard to pinpoint the market circumstances that makes it a favorable method though