This is my take on a method from this thread. http://forums.babypips.com/newbie-island/29084-bollinger-band-trading-mas.html
It is described in that thread by traders with much more experience than me. I recommend you take a look at that thread for an explanation of Bollinger bands, time frame variations, and in depth explanation of the concepts I will use. I am starting this thread to show a simplified and somewhat limited use of the rather complex and varied methods talked about in that thread. Hopefully it will give some other newbies some good tools and a way to look at price action that leads to profitable trades.
The pairs I trade are USD/JPY and EUR/JPY.
I trade during the Asian session.
I use M15 and M5 I refer to H1 for a broader look at S/R and trends.
Set up
M5 chart:
60:2 BB
20:2 BB
5:1 BB
M15 chart:
80:2 BB
20:2 BB
5:1 BB
H1 chart:
I just change the time frame up from my M15 so the chart set up is the same.
Conditions:
On the M5 the outer 20:2 BB must be at least 15 pips apart you can try to trade if they are closer but its risky because of a unpredictable mini breakout.
On the M15 is the center 20:2 BB flat or trending? If its flat take a look at the 80:2 is it flat also? Yes?
That means Bounces.
Look at the 5:1 where is it going? Wait for it to turn from the outer 20:2 towards the center band. A wick out side of the 5:1 and 20:2 is a good time to get in, trade towards the center band. When PA gets close to a trade on the M15 I switch to a M5 to trade. The 60:2 on the M5 is a close approximation to the 20:2 on the M15. I never enter a trade unless PA is outside or at the 20:2 on the M5 , always trade from the outside BB toward the center, of the M5 and M15.
Exit, Stops and MM
Stops get a little tricky and can be fine tuned, I keep it simple I trade a slow session on a small time frame I set my stop at 7 pips or less that includes spread. Exit is on the center band (60:2) or a few pips over my stop if PA stalls I try to keep at least a 1:1 R/R minimum.
MM
KEEP YOUR LOTS SMALL because we are trading a small time frame a little spike can take you out fast, get over it:D
If your entry is good you should make it to the center band if PA is truly range bound hang on to about 3/4 of the way to the other outer BB (60:2).
We are picking tops and bottoms which is risky, KEEP YOUR LOTS SMALL!
A trending market is a little different.
Entry is at the center (60:2) after a wick and always in the direction of the trend. Look at the H1 or the 80:2 on the M15 to determine trend.
I have made that sound really complicated:confused:, put the BBs on your charts and scroll back to see how PA moves in the bands.
I will put up some charts with examples later. next week I will post some of my trades.
As I said before this is a direct rip off of another thread and is just a small part of the concepts talked about in that thread;).
This is an example M15 chart. the blue circles show areas that fit the rules the pink circles are very close trade at your own risk:D I keep a 15 min chart up as the night goes on and when PA gets into a potential set up I switch to a 5 min chart and sit down at the monitor.
This is chart is off Oanda, known for bad charting. for the method I am using it works fine.
Here is a 5 min blow up of part of the above chart. You can see the gray 60:2 BB is an approximation of the 20:2 on the 15 min chart. The blue circles are right on PA wicks out side of all 3 bands.The yellow is close it doesn’t quite get to the outermost band but the 60:2 is flat at this point. The pink circle should be blue:o. Keep an eye on the 80:2 on the 15 min for over all trend. The more conditions that are met the better the entry.
Its really pleasing to see that you have taken various concepts of BB Trading using MA’s and developed your own strat using your chosen currency pair and trading time. I will follow your progress with great interest. Good for you Shr1k.
You guys should try the GBP/JPY daily breakout as well when Tokyo opens.
Looking back over some H1 charts I do see a small move when Tokyo starts up It doesn’t seem to happen as often as the pre London move. I will watch it thanks. I see a sometime pattern of the Asian session moving slowly through the night in one direction then the pre London move brings price back towards where it was when Tokyo opened. Hmmmm…
The GJ break out I know of is designed to wait for a directional move of around 30 pips and then you jump in with the trend. If the breakout isn’t as volatile as the GU one then it might not be worth it…depends on what you are going for…it can be a consistent daily # of pips at least as the base.
You will often see Tokyo retrace a move from the London-NY session and vice versa…not always but most of the time.
With this method you will get stopped out at the start of a trend. see chart;). I think an up trend is starting. All 3 BB are turning up price is bouncing at the 60:2. I am long @ the 60:2 As I said before stops need tuning I am using a 15 pip stop as some of these candles have some long wicks. I keep my risk small less than 1% a trade for this work in progress.
:mad: I got whacked pretty good last night and today. I don’t usually trade during the day but I have Mondays off from the real job so every week I try it and almost every week I do bad during the day. I had to resort to my 1 min scalping from same old story to make some of my money back. I am going to revisit some of that really fast scalping with what I have learned from BB and Moving ave. Lower the risk and expectations even more (to slow and steady) I feel like I am getting closer to a strat that will work for me.
I am not trading to night I was down about 3% this afternoon so I reset my lot size spread sheet with my current balance and a new goal of 0.5% I got just under 1% in about an hour I turned off Oanda with a smile on my face.
Happy trading and Good Luck
Also glad to see you trying to incorporate MA/BB’s with this pair, as they are a bit easier to trade on the West Coast time. Will be following closley (and hopefully adding some inputs:o) Thanks!
Do you know why they went into the negative or were they good trades that PA just went against you?
Some went against me. Some of the problem was time of day the pair moves more when London is open. I need to widen my stop more and risk less during the day. in most cases my stop would get hit then PA would go right where I thought it would. Once that happened a few times I got scared and closed out every trade early leaving most of the pips on the table.
Here are some 1 min trades. Same basic rules as I described just scaled down to a 1 min chart. I always look a few time frames up to look for a trend or a range. I have also learned to check for news times, so I can watch the spread. I am risking right around .03% per trade. I got stopped out twice at the start so I moved my stop out a little.
Everyone says I should trade off the 1hr or 4 hr that stresses me out:o and I mismanage the trades. I cant leave them alone. I will keep plugging away at the 1 min and 5 min. Tonight I got about 1.1% on my balance in about one hour with these trades. I am down over all from poor trading and experimenting(love the penny lots to try new techniques) Enough of that I am going to stick to something that works for me.
Happy Trading
EDIT…
one thing I find my self doing is zooming the chart out to get an overall picture of PA. On the chart the little purple dots are stoploss hits and the triangles are trades. I got one counter trend trade on the third try after getting stopped twice. The rest are with the trend. I have an automatic take profit but its set to 20 pips, if a spike happens in my favor I don’t a small TP to limit my profit.
Scalping is the most difficult skill to learn and takes practise… lots of practise. Try only taking trades when PA steps outside of the 20:2 boll, wicks but wait until PA comes back into the tunnel and chages colour. SL set just above the high/ low wick.
reading this thread is realy exiting for me as im a noob, but iv actually been trading off forex signals for over a year, untill i overstepped my MM and a long loosing streak cost me all my gains from the pervious months
i was wondering what actual timeframe you trade, in GMT for example, and what days and times of day you find are the most simple to trade,:o
hmm… is the date format in dd-mm-yy
or the rediculous usa format of confusion and …
I live in EST east coast USA I trade mostly Asian session.
I set my take profit further away than I expect a trade to go. I close the trade manually at a reasonable profit. If a spike happens in my favor I can still take advantage of it because my trade was not automatically closed. A spike can happen very fast and with no warning if you are watching a short time frame chart.
Try only taking trades when PA steps outside of the 20:2 boll, wicks but wait until PA comes back into the tunnel and chages colour. SL set just above the high/ low wick.