This strategy is in its early development b/c I just thought of it at the gym. Give me some pointers or critiques on why it shouldn't work, or what I can do to improve upon it. Watch the bollinger bands constrict after an up day using a 3 day 15 min candlestick chart. This is your indicator you care about it. Requirements: 1) Stock must be in a short term uptrend. 3 day uptrend minimum. 2) Stock is showing at least average volume. 3) At least 500,000 in volume daily. Bollinger Bands must constrict tightly btwn 245-345. Buy the stock around that time. The next morning, keep VERY tight trailing stop (about 12 cents for stocks priced btwn $10-$20). Purpose of this is to make some quick profits. Stocks in the $10-$20 range, must keep 1000 share minimum to make decent money. Purpose of this strategy is to capitalize on the early morning pop that usually occurs after a late afternoon bb constriction. Many stocks in an uptrend are good for a 30-60 cent pop during a decent market open. DOWNSIDES: Market opens down could mess with the stocks 930-945 pop. With a .12 cent trailing stop, you could eat a loss quickly. I have yet to have any idea how to narrow my filter for possible stocks that have narrowing bollinger bands btwn 245-345 other than stocks in a 3 day uptrend or more. This is a big problem.
First, get "WISE" and build yourself a trading "Watchlist" of stocks with decent liquidity and movement. 1000 to 2000 symbols should do fine. Next, determine the max. time frame for your determination of "narrowing BBands"...1 min, 5 min, etc. Finally, get some historical data for the 1000-2000 symbols, code your logic, back-test thoroughly, and enjoy the profits ! (If any).