Discussion in 'Technical Analysis' started by Kastro_316, May 21, 2006.
What time frame do you use for Bollinger bands?
all time frames
you can use then in any time frame. may need to change the deviations accordingly
It entirely depends what you are thinking of using them for in the first instance.
But whatever you are using them for you must test many different lengths of moving average as well as different bandwiths (EG 1 std dev, 1.5 , 2, etc) and different exit points (eg at the moving average? at the upper or lower band? at the moving average minus or plus some fraction of a standard deviation). And there are many other frills and additions you can experiment with.
I believe I am correct in saying Bollinger devised the bands as a counter trend trading system. Many use the bands as a trend following system however.
Bollinger bands work better in non-trending markets and time frames. This suggests that they're more effective in indices like S&P and longer time frames.
Backtesting would suggest that Bollinger Bands are amongst the many systems which perform extremely well in trending markets.
Many people have made good money using Bollinger Bands to trade trends.
How do you use them to trade trends? Are you looking for a close above/below the band to enter in that direction? Or do you look for a pullback to the bottom band ina an uptrend? thanks
You can make either work. But typically (as has been described in a number of books) you use BBands as an evelope around the moving average to cut out some of the noise. Typically, people buy when the price goes above the band, go neutral when the price hits the moving average. And the reverse for shorts.
Compared to an dual moving average system designed to capture similar length trends, a bollinger band breakout system usually has an equivalent number of winners but fewer losing trades. The dual MA will (obviously) usually get in earlier and end a trade later - since it has no neutral zone. It will also use more margin.
You need backtesting software. And after hundreds of hours of testing and observation.............you will see what I mean.
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