Swing Trading Stocks using Buy Sell Bands

Discussion in 'Journals' started by StockChartist, Nov 24, 2021.

  1. StockChartist

    StockChartist Sponsor

    Hey guys, new ET sponsor here, thought I would start a trading journal as a good way to demonstrate my custom indicators and trading strategy in action and create a swing trading community where we can all interact and share. If you like charts and technical analysis then this should be of interest to you.

    I’m not claiming to be a market wizard or selling the holy grail to trading or anything like that, just offering a place where those interested can follow along and possibly find value.

    I created the Buy Sell Bands and Range Strength custom indicators as a plugin on the TradingView charting platform that anybody can use and that once installed automatically shows on every chart and timeframe you look at, together with these custom indicators I also offer a private members area on my website with trading strategy videos and other resources that you can use the Buy Sell Bands with, I'm also happy to do my best to provide support and help any traders with any problems they may be having.

    I developed the Buy Sell Bands technical indicator because I found Bollinger Bands were too vague and they could be used for both trend following and mean reversion, I wanted something specific to use for a mean reversion trading strategy as I didn't like how Bollinger Bands would "squeeze" after periods of contracted volatility, which is a time when you typically you don't want to fade the move and it's often the beginning of a strong directional move. This is something that Buy Sell Bands doesn't do because whilst it uses a moving average for the middle line, the lower and upper bands are based on past and historical volatility of that particular asset and hence I've found through testing this delivers much better results.

    What the bollinger bands also lacked was a reference to when the market was in a trending or ranging mode and unable to find anything else freely available that could do so either I also developed the Range Strength Indicator to use in conjunction with the Buy Sell Bands and which tells you with a simple green/red visual indicator if the market is currently trending or ranging, so we can see whether it's a good time to make a mean reversion trade or not, as it's often the trades we avoid that make the difference.

    Below is an example of the Buy Sell Bands and Range Strength Indicators shown on the chart.
    [​IMG]

    For this journal I'll be swing trading US stocks (long only) in my real money trading account that I just started for this journal (see screenshot in posts below). I'll be using my Buy Sell Bands and Range Strength custom indicators along with several other freely available indicators to find and manage swing trades in liquid US stocks, with the average trade length being approximately 5-20 days. I only enter limit orders outside of market hours, with no day trading, no derivatives, and no shorting.

    Each day I spend about 15-30 minutes after market close looking for new trades and entering/updating limit orders in my trading account. I’ll post all new trades I open in this journal with accompanying analysis. The goal is to beat the S&P 500 index return on a yearly basis.

    I’ll keep the Google sheet below updated with all trades I make and performance stats just so it’s all in one place for easy reference. I’ve also listed my trading rules I’ll be following in there too.



    *Disclaimer: All content I post on this site or onto any other website should not be taken as financial advice. I am not a licensed financial advisor. Past performance is not a guarantee of future performance. Trading stocks or any other instrument involves the possibility of loss. Please trade at your own risk with funds you can afford to lose.
     
    Last edited: Nov 25, 2021
    yc47ib, deaddog and Nobert like this.
  2. StockChartist

    StockChartist Sponsor

    Here are some back tests of Buy Sell Bands from 2008 until now on a handful of different stocks all using the same parameters that I’ll be using so you can see it’s profitable using just basic defaults even over multiple market regimes, but I don’t think you should just blindly follow any indicator as that’s too one dimensional.

    So the plan with this journal is to improve on the basic settings with some discretion in choosing the best entries by using some extra filters, although my position sizing, gross exposure and exits will still be systematic.

    $MCD 2008-2021 Back test Results
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    $WMT 2008-2021 Back test Results
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    $JPM 2008-2021 Back test Results
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    $INTC 2008-2021 Back test Results
    [​IMG]

    $AAPL 2008-2021 Back test Results
    [​IMG]
     
    Last edited: Nov 25, 2021
  3. StockChartist

    StockChartist Sponsor

    Here are some examples of the kind of trades I'll be making as shown on the charts. Basically looking to buy mean-reverting stocks 1 tick below the lower Buy Sell band then exit 1 tick above the middle Buy Sell band, with 10% of my account in each trade (max 15 trades open at any time).

    All entries are entered as limit orders valid only for the next day and all resting sell limit orders on open positions are updated after market close each day with the latest price targets. For all my trading rules check out the 3rd tab in the Google sheet I posted above.

    $EA Trade Example
    [​IMG]

    $CAG Trade Example
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    $YELP Trade Example
    [​IMG]
     
  4. StockChartist

    StockChartist Sponsor

    I opened a new $46,000 brokerage account this Monday specifically for this journal and have already started making a few trades as shown below.

    [​IMG]

    Happy to share, learn and stay accountable so we can all become better swing traders. If anybody has any questions feel free to ask and your feedback is also welcome here, I’m hoping to become a better trader too with this journal by chronicling my trades and processes.

    Jared
     
    yc47ib and fan27 like this.
  5. deaddog

    deaddog

    Can you walk me thru your exit strategy if a stock isn't moving in your direction?
     
  6. fan27

    fan27

    Glad to see you demonstrate your offering on real money. Good luck!
     
    Onra likes this.
  7. StockChartist

    StockChartist Sponsor

    Sure, basically the middle line in the Buy Sell Bands is the 50 day WMA (weighted moving average) and every day after market close I update my resting sell limit orders on open positions so that they're 1 tick above the Buy Sell Band middle line, and the stock will always eventually come back to this price even if it's at a lower price.

    I've tested using price based stops and time based stops and it always degraded long term performance, basically you get paid for tolerating volatility, so some trades every now and then will have big losses but that's why I only put 10% of my account in each trade, so for example a 30% loss on a single trade will equal a 3% loss on my account.
     
  8. StockChartist

    StockChartist Sponsor

    Thank you for that, much appreciated!
     
  9. Overnight

    Overnight

    You claim that your system works on all instruments, including futures. Have you tried it on RB and LE?
     
  10. deaddog

    deaddog

    How did your back test do in the covid panic?
     
    #10     Nov 24, 2021