How to use this Bollinger?

Discussion in 'Technical Analysis' started by uexkuell, Jul 14, 2010.

  1. The yellow line is an upper Bollinger band.
    It seems to be respected quite well.

    Please give suggestions how a trading strategy might be designed that would take advantage of it.

    (In this sample multiple times intitiating a short when the Bollinger band was touched would have led to a loss.)

    <img src=>
  2. Of course I don't know your settings or time frame. BUT, that's one of the positives of B/Bands. According to John B. the bands (supposedly) will work in any time frame. I'm sure you have it, but others may not so I posted an Amazon link to "the book" on B/Bands. Others may see something else, (you know that voodoo thing) but what I see is what is called "walking the band". As a matter of fact it looks like a "perfect" example!!

    How would I trade it? Just like you said, buy it on the bottom band sell it at the upper.. Watch out for the "head fake" (3rd grid line from left) and hang on. If your lucky and prices start "walking the band" hunker down, hang on and let the profits pile up!!!!!!

    A great example

  3. Not sure if the question was formulated precisely enough:

    When should a short position be entered based on this chart?

    What would you suggest as a help to decide when it is time to go short if price moves as in this chart?
  4. Big AAPL

    Big AAPL

    Bollinger Bands, like any other indicator, are unreliable on their own. Price touching the upper or lower bands should be the first signal, and when accompanied by divergence on your favorite oscillator, approaching areas of support/ resistance, and overall Price Action in the fractal YOU are trading all make up the entry or exit criteria. Like a chef in the kitchen, only experience can make the user incorporate all these ingredients to make a brilliant meal.

    Although I personally don't use BB, the one unique characteristic it does posses is constriction, a clear visualization letting you know that the instrument is in a period of consolidation, almost always leading to some sort of breakout.
  5. ===================
    a}Long story short, figure out where your stop loss is first;
    because whatever your indicators[price... price based, moving averages, 50 period ma,20 period ma/midpoint].....]-controling business expences[stop loss] is more important.

    z]And while any indicators we just discussed can be helpful;
    B bands can easly be wrong 3 or 4 months/more in a row......
    Wisdom is profitable to direct.

    And are you sure that a top BB, looks more like a 50 ma. Where is botttom BB, if it is a top BB??

    And Mr Bollinger[John] noted stocks are like sheep;
    they move in groups:cool:
  6. What is this a chart of (instrument and timeframe of the bars)?

    Since the chart has no information, I will answer the same way.

    See - the price respects the lower band (I am only showing the lower band) but is only a short if the price breaks the band while the other indicator is coloring the chart with a red background.
  7. OK...I can definitely answer this one.

    I'm saying all this from my experience and how I use them. Don't know how you trade.

    First off, bollinger bands need to be adjusted in width to where price almost never goes outside of it, but it touches it. In your picture, price is on the topside of the bollinger band, so the band isn't really a true top or barrier. Adjust the BBs so price hardly ever gets outside of them.

    Next, realize the BB's move. You can think of them being pushed out of the way by price. Or you can think of the price as sliding along the BBs. But here's what you need to realize...price can hit an upper BB, and then they can move up together. That means shorting doesn't always work in that scenario. Likewise, price can hit the lower BB and they can move down it's not always a place to go long.

    But they can be. If price slides along a bollinger band for a while, I've noticed that when it comes off of one, it moves away from it nicely in most cases. So if price hits an upper Bollinger band, don't even think of shorting until it comes off the BB, and even then it can come right back up and hit it again. But...if price hits a BB, and slides along it for a while, and then comes off...then you have better odds.

    Also...timescale is relavant. I think you'll find BBs more useful if you watch them in the timescale above the one you trade. If you're a day trader, look at multiday BBs. They can tell you where the trend should be for the day when price is moving away from them.

    And finally...BBs by themselves have a limited use. But they are powerful if they are part of a pair or trio of decision making indicators. Decide that you will only trade when two things are happening simultaneously, and you're increasing your odds of success.

  8. Pita


    Why not simply say what it is and that's there is no BB on this graph/chart.
  9. There is a BB on MY chart - but I only give as many details as the OP.
  10. The OP said the yellow line was the upper BB. He probably specified it was the upper one because the lower one isn't visible in the screen shot.
    #10     Jul 16, 2010