Anyone using Bollinger Bands to make money?

Discussion in 'Technical Analysis' started by jbtrader23, Oct 19, 2002.

  1. You're exactly right!

    I've been watching this Bollinger for a long time....since he was a part of FNN. You could have lost a fortune listening to this stuff.

    Just figure it this way. Everytime your stock runs up sharply, it's at the top Bollinger Band. Everytime it runs down sharply, it's at the bottom band.

    And by the way, when they run it down, it's not only at the bottom bollinger band, the MACD is negative and the stochastics qare oversold!:)

    OldTrader
     
    #21     Oct 20, 2002
  2. i use bollinger's bands and i like them. although not for the traditional reasons or the traditional way.

    best,

    surf:)
     
    #22     Oct 20, 2002
  3. Originally posted by NihabaAshi

    Ok, he possibly uses them in a discretionary way. Although I dislike discretionary trading, I guess I'd still like to hear how he applies it, even it is discretionary.


    Well, because just because *I* have found them to be worthless so far, doesnt mean... Plus, when others are saying they're doing real well with them, I'd like to know how.


    Nope.

    Maybe, maybe not..

    Well, I simply havent found something that would tell me when to go for the break and when to fade them. Moreover, even if it's 50/50 each way, I haven't found a decent risk/reward scenario with entries and exits.

    No need for PM. I feel comfortable talking in public about this.

    Appreciate it.
     
    #23     Oct 20, 2002
  4. Bono

    Bono

    Just a suggestion ... the Bollinger Bands are based on volatility ... so has anyone tried trading options using them ?

    I'm not sure if John Bollinger himself tried that ... but I did ... and it seemed liked the only way you can make with those bands .... buy a strangle/straddle when the bands are tight ... and sell it all once they diverge ... oh ... that was on the FX market ...

    Good Trading !
     
    #24     Oct 21, 2002
  5. Everyone has their favorite TA methods. Personally, I use BB's, volume and MACD histogram to come up with trade candidates. I never got into Stochastics, OBV, Fibonacci, etc. Some people swear by them, others don't.

    The tightening of the bands is another useful application to see volatility constricting. Look at a 5 year, weekly VIX chart. It tightened tremendously in the summer of '98 and then, an explosion of volatility leading to readings above 50. Well what do you know, the same thing happened recently, a sharp tightening of the bands, then an explosive move upwards, with historic readings in the 50 range. I don't view any indicator as the holy grail, but simply as a useful tool.

    My method is to sell short at X% above the upperband, covering as it re-enters the band (within a few days max). Using MACD histogram and volume to weed out the powerful uptrends likely to continue. EK recently is quite an extreme example of this. Shorting something like YHOO in the last week is suicide. 52 weeks highs in MACD histogram and volume. I don't step in front of freight trains.

    There are other methods of determining when a stock has reached an extreme, then deciding to go the other way. For example, there is some finite limit that a stock can reach over it's 10 dma (say for NYSE stocks). In GE's history, when reaching X% over it's 10 dma, the odds of reversing become very high. It might not happen very often for a particular security. Most stocks I trade only exhibit these characteristics a few times a year.

    Even 200 dma. The NASDAQ in 2000 was more overbought than either 1929 or the Nikkei in 1990 using this criteria.

    My whole trading philosophy is based on the premise that stocks don't go in one direction forever. When they reach a certain extreme, the odds of reversing become much higher. Measuring that extreme then going the other way is what I've made money from.
     
    #25     Oct 21, 2002
  6. Buy1Sell2

    Buy1Sell2

    Bollinger Bands in conjunction with Histogram and RSI are extremely powerful. They can even be traded by themselves with a tight stop.
     
    #26     Feb 5, 2006
  7. K-Rock

    K-Rock

    #27     Feb 5, 2006
  8. I'm with Bono. As an options trader, BB's are an invaluable tool for volatility breakouts when the bands are contracting. I'll buy straddles all day long when the bands are constricted. I use BB's in conjunction with HV/IV skew, and IV range over various periods as well.
     
    #28     Feb 5, 2006
  9. Pekelo

    Pekelo

    This thread must be some kind of ET record, resurrected after 3 years 3 months.

    Yes, BB is the holy grail of trading, but one has to know how to use it. I posted several charts in other threads about its usage...
     
    #29     Feb 5, 2006
  10. K-Rock

    K-Rock