Use of Bollinger Bands intra-day

Discussion in 'Trading' started by traderkay, Jul 18, 2001.

  1. So far I found one. When they get real narrow, it's time for a mini "volatility breakout" outside the band. sometimes you can anticipate its direction based on recent action or just jump on board. good for a scalp. are there any other practical (not theoretical) uses?
  2. I use them to fade moves and pullbacks into the bands. They usually control the range, so buying on the bands and pyramiding when it goes under almost always works.
  3. Hoyler


    hi Traderkay

    I make use of BB's intraday. The smaller the timeframe the less valuable (i.e., more risk you take on) when buying/selling above or below the band. A reliable signal can come off of the 15 minute chart.

    The 2 inherent properties of bb's that you can trade with are:
    a) Reversion to the mean; moves outside of the bands are anomalous.
    b) Persistency; the continuance of an effect after the cause which first gave rise to it is removed.

    Try and place these two properties on your side -- read P2's post, he has it right.

    You can lessen the amount of out of band occurrence's by changing from 2.0 standard deviations to 2.5 etc. Fewer signal's will be generated, while those that are, are statistically enhanced even more so, to take advantage of the above 2 properties. This is my preferred method as opposed to shortening the length of the moving average.

    1 standard deviation encompasses 67% of all occurrences
    2 standard deviation's encompasses 95% of all occurrences
    3 standard deviation's encompasses 97% of all occurrences

    With the above in mind, can you place yourself in a higher reward/lower risk position?

    Practical use; confirmation of double bottoms/tops, first legs thrust can pierce the band, the second is held in check denoting either support/resistance, validation of the chart pattern (s)
    The squeeze; progressively narrower bands awaiting a potential breakout. (see JNPR 7/12/01 or JNPR today 7/20/01)
    Support and resistance in a trading range.
    Riding the band - violent moves during a breakout.

    With the proper software a Bollinger band oscillator can be created, in my experience it is easier to program a set of rules with the oscillator versus the bands, they will show the same thing, displayed differently. Mr. Dobson has a nice tutorial on bb's, it's simple, visual and effective for $ 8-10

    The aforementioned represents my opinions and experience.
    I hope this helps.