Exit 1 (X1) is made according to the BB rule.
The black vertical line shows where the opposite (lower) BB started to contract after expanding.
Exit 1 is the close of the very next candle after the black vertical line.
Exit 1 is shown on the chart and a very thin green line is extended from it to the price scale to show its value.
Exit 2 (X2) is made according to the parabolic sar.
The red X shows the crossing of the sar with the mid BB.
Exit 2 is the close of the very next candle after the red X.
Exit 2 is shown on the chart and a very thin green line is extended from it to the price scale to show its value.
Since this trade is going long, the exit of the parabolic sar is superior to that of the BB rule.
However, the 2nd exit occurs 2 hours later than the 1st. (20 minute chart).
If this was a daily chart we would exit 6 days later.
On this scale here, the exit difference is about 5 pips.
Attention to the time factor is very important when considering the better exits.
Is it really worth waiting a whole lot of extra time to get just a few pips more?
I just wanted to thank you for directing me to Kinetic Securities, where I was able to obtain an unlimited demo of GFT Dealbook’s trading platform. This was the only hindrance preventing me from using DealBook, as the demo on their website is only 30 days long, but now I have the ability to experiment with it and can see its full potential.
This may have been my stepping stone on the way to opening a Live Account at GFT.
I was following your Candlesticks (version 2) thread but unfortunately it closed before I reached the end and could make contact with you. I have though, this last week, come upon your new thread, and with some rapid reading have now come to the last posting. So not only is this my first contact with you, it is also my first posting on BabyPips.
I was tremendously impressed with the Candlesticks thread with the dedication that you gave to teaching others how to trade your method. Knowing from the thread, your background as a teacher, you excelled in the field of explanations and charts.
If anything, I’m even more impressed with this series, with your explanation and diagrams. Apart from one or two disruptive pupils you have maintained a good pace without being deflected unduly with their misbehaving!
I am also retired (chartered engineer) and ‘long in the tooth’. As I also have a DealBook account your charts are very familiar in format for me. I for one am both enjoying and learning from your thread – ’ the finest in trend trading’ – and I am sure many others are too.
Have you considered a stop on the high or low of a candle that is near the high or low of a Bollinger Band?
For instance, if you’re short on a trade, and it nears the lower BB. You could start placing stops 10-20 pips above the high of every short candle.
And if the trade keeps running downward after a retracement, you could choose to re-enter the trade when it drops below the low of the candle you had your original stop placed.
Just a newbie ?. When you are looking for a contraction signal from the opposite BB are you looking for a visual ie curve up/dn or are you watching the BB readings that are given for the upper and lower BB’s? It seems that it’s fairly easy to see the change in direction on a chart after it’s fully formed but when your watching it before it’s formed its trickier to detct.
I goofed in not quoting you on my last message. My “missed that” referred to the Kinetic Securities comment you made.
In any case, I now have my GFT demo account and, while not trading trying to trade anything, I have set up all the indicators you mentioned (Guppy averages, new mmacd, and BBs) and I am extremely grateful to you for this entire teaching activity. The visual display of the indicators, along with the price info REALLY helps to see what is going on.
But there is more than one section to this thread.
And the indicator section comes first so that we can build on the knowledge gained in order to look at the next section.
In this awful example of a 4 hour chart we can see the MMACD crossover for going short.
It is a nice long trade.
But look at the stochastic!!
It was in the oversold at the beginning and the slow D line crossed over the K line very early on in the trade - see black vertical line.
We only look for crossovers in the stochastic when the indicator has reached its overbought or oversold limits.
There are no more such cases in the entire trade.
In this case, we start the trade with a clean BB bubble.
And the stochastic does a good job of showing the best exit point in the bubble.
It by no means the best exit in the trade but it is, nevertheless a good one.
The stochastic appears to do well when the trade commences with a clean bubble.
The exit also matches perfectly with the point where the opposite BB, after expanding, now starts to contract.
The stochastic gives us an excellent exit - better than the other methods.
The BB rule gives us the same exit but with lagging indicators the contraction of the opposite BB can be difficult to detect.
This is not the case with the stochastic - the exit is clear.
It would appear that the stochastic is the best indicator for exits when we have clean bubbles.
In this 20 minute chart of the Swissy, we now load the MMACD to enter short in the trade and load the stochastic to find the best exit on the lower BB. >>>
