Bollinger Bands

Discussion in 'Index Futures' started by El Cazador, Jul 23, 2002.

  1. Are many of you e-mini traders here using BB as your main indicator? If so are you trying to sell the upper band and buy the lower one or do you employee it in more sophisticated setups?


  2. OHLC


    The BBs alone are useless, IMO.
    I use them as a secondary tools.

    You should parameter the number of std deviations according to the kind of underlying you trade.

    I use the BBs to determine timing, targets, and also for money management purposes (position sizing, to be more accurate).

    For targets : I identify the significant time frames for the underlying. Then, I look for past or current breakouts through the BBs. For example : if the significant time frames on XYZ commodity are 5' 35' and 110' and the current price is outside of the 35' BB, and has previously been through the 5' before being back to what I consider an entry point, I aim for the 110' BB as a first target. (just an example)

    For timing, I usually take positions on retracements, these corrections should not get out the relating BBs.
    So, I use the BBs with my expectations on volatility to determine the most probable time/price combo and screen the most interesting underlyings.

    For position sizing, the BBs limit the price levels I would considerate for strenghtening a position.

    As a matter of fact, using only one kind of BBs is a losing concept.
    If you buy/short the low/high BB, you get busted as soon as the market starts trending. Same thing if you buy/sell the breakouts, you get busted when the market consolidates.
    Even with a wise money managment, it does not work, this can be proved with system testers.
    You need to find an edge elsewhere, before supplementing it with the BBs, which are only a statistical tool

  3. egildone


    I have been watching the naz emini candle chart and noticed that much of the time it reverses with a tweezer red and green candles, with the red on the left for up reversals and on the right for down reversals. After these tweezers show up it trends in the direction of the reversal. Has anyone used these and do you use another indicator to confirm a reversal?

  4. El Cazador,

    Bollinger Bands are a critical aspect of my trade setups for trading the Eminis...with confirmation from volume analysis and Japanese Candlestick analysis.

    My BBand use is via 1min, 3min and 15min intraday charts.

    There's a lot more to it than just..."Sell the Upper Band and Buy the Lower Band" or "Buy the Upper Band and Sell the Lower Band"....

    By the way...both statements above are correct.

    Confusing huh...reason why some cannot figure how to use the BBands for consistent profits.

    A few things you may want to explore, review or study....

    watch how the BBands behave with certain candlestick patterns...specifically...Reversal and Exhaustion candlestick pattterns...ignore the continuation candlestick patterns...

    watch how the price behaves after volume spikes at the upper band and volume spikes at the lower band...

    watch how the Upper and Lower BBands behave when they are extremely diverging from each other during parabolic price moves...up or down.

    I won't go into anymore details because I know how complicating their application is...

    so that's your explore and study some of the tips above.

    Good luck and good trading

  5. I don't use bollinger bands or other mathematically calculated indicators on intraday charts at all, but all the time on the daily charts. They need a certain amount of data to give good signals.

    Sometimes the bollinger bands and the stochastics seem to really "fit" a stock or index and can be fantastic when they agree. Of course, that situation doesn't last forever. Strongly trending markets screw up the bollinger bands and the stochastic and the MACD.
  6. Miki


    I don’t use BB so, the above statements look confusing to me. :confused:

    Please, elaborate…thanks.
  7. Miki,

    "Sell the Upper Band and Buy the Lower Band" or "Buy the Upper Band and Sell the Lower Band"....

    Eventhough its a correct but confusing statement...means that their are Long signals (go Long) at the Upper Band and depending upon the pattern...another trade situation...their could be Short signals (go Short) at the Upper Band.

    Same for the Lower band.

    It all depends on the price pattern that determines how to use the Bollinger Bands.

    For example only (hypothetical)...a particular price pattern at 10:12am may have you shorting the close above the upper band and 3 hours later via a different price could be going long at the close above the upper band via a different type of pattern.

    That's one of the most common misuse of the BBands or the reason why many cannot find any use out of them...because they try to put a fixed trade setup on all Upper BBand signals or a fixed trade setup on all Lower BBand signals and/or without any confirmation from other indicators.

  8. Tony01


    I'd just like to recommend the book "Bollinger on Bollinger Bands" if you're interested in learning about what they are and how to/not to use them. I think it'll answer a lot of your questions about BBs.

  9. Bsulli


    Does the book cover intraday uses of the bands as well on daily? I read alot of his other materials and intraday comments can be a hit or miss. Personally I don't trade without them. Save my butt many a time with BB's.

    Thanks in advance

  10. pretzel


    #10     Jul 25, 2002