3D-Bollinger Band

Discussion in 'Day Trading' started by columbus, Oct 8, 2012.

?

Helpful ?

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  2. No

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  1. columbus

    columbus Well-Known Member

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    Calling it as 3D-Bollinger Band is a bit misnomer, because it does not belong to a particular Average and Standard Deviation as in the case of 2D-Bollinger Band.But it contains a series of 2D Bollinger Bands with different Averages and Standard Deviations and they are arranged in such a way to give a 3D impression.Most of the ideas are taken from 2D-Bollinger Band.


    Basically it contains 7 Bollinger Bands[From BB(21,2.1),BB(22,2.2), BB(23,2.3),BB(24,2.4),BB(25,2.5),BB(26,2.6) & BB(27,2.7)]and Guide lines in form of BB(21,0.7) as indicated in the chart.By choosing 0.7 Standard Deviation, it will divide the Total BB into 3 zones, namely TOP (bullish),MIDDLE (neutral) and BOTTOM (bearish) zones.

    Rules are same as 2D Bollinger Band.BUY at lower Band and SELL at top Band.Any Time Frame from 3min to 5min can be used.3min is used for Entry/Exit and 5 min is used for getting overall trend.

    But sometimes it so happenes that after taking a BUY at Lower band ,it moves in UP direction for some time but suddenly it drifts down.In such case Guide lines will help.Now we are forced to take another month future or option of another strike so that it will not cancel with other existing future/option.At the end of the trend, square off the latest future/option and take another lot of old future/option.This is a better AVERAGING.Now the Million Dollar question.How to identify the end of a trend?If the candles are sandwitched between bands and guidelines (either LOWER or UPPER as the case may be) then RIDE the trend.The Guide lines start appearing prominently and move away from CANDLES,then it indicates a Reversal.

    [​IMG]
    [​IMG]

    I discussed about BASIC 3D-Bollinger Band and many TWEAKS are possible by sacrificing outer Bollinger Bands.It is based on RISK appetite of the Individual.

    Please bear in mind that on EOD chart, everything is known, PAST,PRESENT and FUTURE.But on a LIVE chart we have to derive the FUTURE based on PAST and PRESENT .So it is a bit difficult.
    Nevertheless we have to strive hard to reach our target.


    Hats off to John Bollinger ,once again !!!
     
    Last edited: Oct 8, 2012
  2. columbus

    columbus Well-Known Member

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    It is a good idea to have previous day's trading data.Because the Y-axis is derived taking care of old data also.If data is carried from previous day,we can see 3 distinctive parts of the BAND namely (from START to 11AM),(11AM to 1PM) and (1PM to END).These are ROUGH estimates and may change a bit.These are slightly Time Frame depedant and mentioned time intervals are those for 5min Time Frame.11AM and 1PM are transition points because the influence of previous day data ends at 11AM and European markets open at 1pm (MOSTLY).

    [​IMG]

    We may not see all 3 zones everyday.For example if there is no GAP-UP or GAP-DOWN ,the FIRST zone may not be distinctive.If there is no break-out after 1PM then THIRD zone may not be there.If previous day was choppy and there is no Gap Up/Down ,then today
    chart may look identical with that chart continued from last trading day.

    All types of instruments can be traded using this method.
     
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  3. columbus

    columbus Well-Known Member

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    The same technique can be applied to Positional nifty data or very liquid stocks.

    [​IMG]
     
  4. columbus

    columbus Well-Known Member

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    One tweak is to sacrifice BB(26,2.6) and BB(27,2.7) and plot EMA-2(high) and EMA-2 (LOW) as indicated below.

    [​IMG]

    Many such tweaks are possible.Please share interesting and helpful
    tweaks.
     
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  5. timepass

    timepass Moderator

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    .. and produces another picture when continued from the previous session.

    [​IMG]

    Sigh !! The problem is, everything appears so nice and cut-n-dried on trending days. Let's see how it performs on rangebound/whipsawing days.

    :thumb:
     
  6. columbus

    columbus Well-Known Member

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    On range-bound days ,better to stick to Today sample rather than continued
    from last trading day.Let us see .....
     
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  7. angira

    angira Well-Known Member

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    One more nice BB concept from u'r side Columbus sir,

    I'll try it from next trading session.

    tnx,
    angira...
     
    Last edited: Oct 9, 2012
  8. timepass

    timepass Moderator

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    The problem is, at opening and for first 2-3 hours we don't know whether the session is going to be rangebound :).

    So, at opening we take "continued from previous session" by default.
     
  9. columbus

    columbus Well-Known Member

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    Basically it contains 7 Bollinger Bands[From BB(21,2.1),BB(22,2.2),
    BB(23,2.3),BB(24,2.4),BB(25,2.5),BB(26,2.6) & BB(27,2.7)] and
    Guide lines in form of BB(21,0.7) as indicated in the chart.By
    choosing 0.7 Standard Deviation, it will divide the Total BB into
    3 zones, namely TOP (bullish),MIDDLE (neutral) and BOTTOM (bearish)
    zones.

    Rules are same as 2D Bollinger Band.BUY at lower Band and SELL
    at top Band.Any Time Frame from 3min to 5min can be used.
    3min is used for Entry/Exit and 5 min is used for getting overall trend.


    [​IMG]
    [​IMG]


    At EOD,I have CALL positions.
     
    Last edited: Oct 9, 2012
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  10. columbus

    columbus Well-Known Member

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    [​IMG]

    I feel on 3 min time frame ,it is looking better.
     
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