Right, thats all the questions and comments answered.
We have looked at a sample motivational trade.
We have set all the starc band parameters.
[B]Now to the operations (entries and exits) proper.[/B]
[B]In the schematic diagrams to follow you will learn how to do entries and exits with the Starc bands.[/B]
You will then understand how we got those wonderful entries and exits with that very difficult trade of GBP/JPY shown above.
Look at the following [U]schematic diagram[/U] >>>
By tymen1 at 2009-02-26
The ladies should like this one!! 
The blue lines are the Bollinger bands and the area in between is shaded light blue.
The Starc bands in pink, travel up and down between the Bollinger bands.
Sometimes, they extend just a little past the Bollinger bands.
We will see that in examples to follow.
Now the price action tends to travel in and around the Starc bands as shown >>>
By tymen1 at 2009-02-26
…around the [U]middle [/U]bands for [U]level [/U]Starc bands.
…around the [U]upper [/U]bands for [U]rising [/U]Starc bands.
…around the [U]lower [/U]bands for [U]falling [/U]Starc bands.
Look at the following [U]schematic diagram[/U] >>>
By tymen1 at 2009-02-25
This is a case of [U]level [/U]starc bands.
I have used many colours to help clarify explanations.
The Bollinger bands are blue and the area in between is very light blue.
The inner starc bands (0.45) are highlighted in yellow.
The price action is shown in dark green.
The price action in this case of [U]level [/U]tends to travel in between the upper and lower 0.45 lines.
You would enter and exit at these upper and lower 0.45 lines as shown.
The price action will often go outside these lines giving opportunities for even better better entries and exits.
But these lines are the limits for entries and exits.
[B]Lets have a look at what we do when the Starc bands are going up.[/B]
For simplicity, I have not included the Bollinger bands >>>
By tymen1 at 2009-02-26
The diagram says it all.
Short trading here is very risky.
Of course, we always trade in the direction given by the candlestick pattern.
For example, a piercing pattern tells us to trade long.
With the bands going up, you would commence your long entries and exits.
If the bands go down you do nothing (Just watch).
[B]Now the situation for going short [/B]>>>
By tymen1 at 2009-02-26
Again, the diagram says it all.
If you were trading long, as directed by a long pattern, then you would simply have to wait here until the bands changed direction.
[B]These are the easy parts.
Now we must look at the very dangerous sections when the starc bands approach and touch the Bollinger bands.
I will introduce this section step by step…[/B]
Lets us differentiate between actual Bollinger band breakouts and just changes in direction.
The diagram below shows the difference.
I have added some extra lines to the first diagram to make it look like a trumpet playing notes so that you can remember.
This is a genuine breakout.
Note that [U]both bands[/U] are expanding.
In the non genuine case only one band expands.
>>>
By tymen1 at 2009-02-26
OK, thats it for now.
Continue tomorrow.
One thing at a time.
There is plenty here to chew on!! 
HI tymen! I have two questions. Does this thing of the bollinger bands in the 5 minutes chart is a new thing? Or I missed something in the first thread?.
Second. I’ve found that almost in every case price hits the upper or lower starc bands, not just the ones with factor .45. Entries and exits are in the .45 bands for precaution or it’s just me that I’m being lucky with price hiting factor 1 bands?.
Thanks in advance.!
The Bollinger bands have always been on the 5 minute chart.
They serve the purposes that I have explained above- expecially in the area of warning that a change of direction is imminent.
Second. I’ve found that almost in every case price hits the upper or lower starc bands, not just the ones with factor .45. Entries and exits are in the .45 bands for precaution or it’s just me that I’m being lucky with price hiting factor 1 bands?.
The bands will be different with the original settings.
If you can get an entry with the upper band, good for you.
But the 0.45 settings are the minimum requirements.
I will keep in mind what you have said here and monitor the situation.
It is possible that I will make a further change after the monitoring but for now, 0.45 seems to work well with the original bands.
There is no doubt that the extreme bands were too jerky and unmanageable.
How you got around that surprises me.
[B]Some charts from you would be welcome.[/B]
[B]We will now continue the journey with looking into the dangerous areas with the Bollinger bands.[/B]
Lets see how we can discern the growth of a Bollinger band >>>
By tymen1 at 2009-02-26
Watching in this three stage diagram allows us to see that this is [U]not [/U]a full expansion breakout.
Now look at another case >>>
By tymen1 at 2009-02-26
By waiting we see that here we have a full Bollinger breakout.
[U]During the time of waiting, we should not be trading.[/U]
We simply [U]do not know[/U] whether the starc band will reverse or go on to walk the Bollinger bands (upper or lower) and take the price action with it.
This says it all >>>
By tymen1 at 2009-02-26
By racing in and trading long when the starc bands approach the BB, you could end up regretting your move.
In a lot of cases, your trade will eventually go back again to the long direction
but only after a lot of waiting (time wasting) and a drawdown approaching your stop loss.
However, there are also cases where the stop loss is hit and you lose your trade.
In this case you should lose 2% at most of your available funds right?? (money management).
This matter is also true but exactly the reverse for a short trade when the starc bands are approaching the lower BB.
[B]The rule is that when the starc bands approach the BB, it is time to hold off and wait till you know what is going to happen next.[/B]
[B]This can sometimes take up to 7 of the 5 minute candles.[/B]
Here is another diagram >>>
By tymen1 at 2009-02-26
This diagram shows what happens [U]when you wait till you know what is happening.[/U]
In this drawing, I have shown a full Bollinger band expansion and the starc bands, containing the price action walking the upper BB.
Effectively the price action is now walking the upper Bollinger band, and simultaneously walking the upper starc band.
In that case, [U]a good solid entry[/U] can be got at the mid starc band (according to the rules) and a [U]nice exit be got[/U] as the starc bands start to break away from the Bollinger bands.
[B]I will now look at some real live examples[/B] >>>
By tymen1 at 2009-02-27
In this case we see that the BB has done a complete breakout (like a trumpet) and the starc bands are following the lower BB going down.
[B]These cases are extreme and make excellent trades providing you have waited till you know what the Bollinger bands and the Starc bands are going to do.[/B]
The price action is very much outside of both envelope bands.
You would [U]not[/U] enter short on that first red candle after the doji.
At this point you are still waiting see see where the system will go.
The entry is made on the second red candle.
As you can see, a best short entry here is more in the lowest of the Starc bands.
This is pretty well standard entry practice when doing these trades.
The exit of this trade is not made at the bottom of the red candle but rather we wait until the Bollinger band walk comes to an end >>>
By tymen1 at 2009-02-27
In this case you would exit when the first of the green candles start to develop.
Since we are trading short, we see that the starc bands are still going down strongly, which means that a short entry at the last green candle is excellent.
[B]Yep!![/B]
That last (4th) green candle was indeed an excellent short entry point >>>
By tymen1 at 2009-02-27
This 4th candle became red as you can see and the next candle brought the price right down.
Where will we exit? 
Well, the green candles have returned and it is definitely time to exit!! >>>
By tymen1 at 2009-02-27
Moreover, the Starc bands have now broken away from the BB and have gone level.
Level trading rules now apply.
[B]Level trading rules now apply [/B] >>>
By tymen1 at 2009-02-27
Since we are trading short, these rules state that…
-
Short entry taken at upper 0.45 band.
In this case we could have done a lot better than that as the chart shows. -
Short exit taken at lower 0.45 band.
The last red candle had its lower wick touching this band.