Thoughts on using bollinger bands to intraday trade

Discussion in 'Strategy Building' started by jgiasi, Sep 14, 2005.

  1. jgiasi

    jgiasi

    Folks,

    Any thoughts on using BB's - particularly with parameters other than the typical 20 period/2 std deviation ones.

    My focus is on quick trades with holding periods lasting from a couple to a few miniutes. My trading vehicle is the S&P index futures or SPY. I have had some decent results using the BB's on a 1 min chart with the 20 period/2 SD setup but noticed when I went to a shorter period I had the luxury of seeing more trade set-ups.

    My goal is simply to achieve a risk/reward ratio of 2.5 or higher (e.g. risk 3 cents to make 7 cents).

    Lastly, my basic methodology is to wait for price to go from the lower BB to the upper BB and back to the lower BB. Then, to use my intuition, time of day factors, price behavior, and trend momentum to help me to determine if the next couple - few bars are setting up a short or long.

    Obviously, there is some discretion in all of this but I hope that the basic idea is conveyed.

    I have attached a chart from todays trading on the SPY which shows this concept during the 1:55 - 2:10 time period this afternoon. On it, you can see that there were two short set-ups right before 2:05 and a better one just past 2:10

    Thanks, Jennie