BollingerBands

[ankit3066]

@columbus - Sir , can Bollinger bands be used for positional trades. If yes, then what could be the possible settings and time frame ?

 

[ankit3066]

My way of trading... I do EOD analysis with BB70,1 and EMA 21 crossover. In case I see EMA piercing the BB from TOP (at Top Band), I would plan for going short at every day till 8-10% of price target is achieved. Reverse logic when EMA approaches from BB Bottom.

That done, I would use a dual BB (BB20,2 and BB20,3) for entry and exits during day. The outer bands will be your SL points.

Sir, can you please post charts for both the parameters on the required time frames i.e

1. BB70,1 with ema 21
2. BB20,2 and BB20,3

It will provide a clear understanding for beginners like me.

 

[columbus]

Sir, can you please post charts for both the parameters on the required time frames i.e

1. BB70,1 with ema 21
2. BB20,2 and BB20,3

It will provide a clear understanding for beginners like me.

Hi ankit3066,

Since my other computer on which TRADETIGER is down , let me visualize.

1. BB70,1

Take 70 samples .Plot SMA-70 as middle line and plot TOP band & Bottom band away this
at a distance of 1 Standard Deviation of 70 samples.

Such set up can work for lower time frames ,because ,even if you take 1 MIN as time
frame ,the FIRST sample appears after 70 minutes ( at 10.25 ,as of now).Since
lower frames are used ,the distances between TOP & BOTTOM bands is rather low.
Needless to say ,such a set up is useful to SCALPERS.

2. BB20,2 and BB20,3

Take 20 samples .Plot SMA-20 as middle line and plot TOP band & Bottom band away this
at a distance of 2 Standard Deviation and 3 SD of 20 samples.

Such set up can work for Medium time frames ,because ,even if you take 1 MIN as time
frame ,the FIRST sample appears after 20 minutes ( at 9.35 ,as of now) and appears
after 60 minutes (20*3) for 3min TF.Since Medium frames are used ,the distances between
TOP & BOTTOM bands is a bit far away. Needless to say ,such a set up is useful to DAY TRADERS.

I will put a chart after sometime.

 

[Pradeep Narayan]

Let me show you an example... I am using BSE Charting as it is mostly available to all freely and can serve to teach the technique.

The Scrip is Reliance. The first chart (Reliance BB70) provides the trend and entries from a swing perspective - this is the EOD Chart.

The second chart Reliance BB20 shows how to make a day trade keeping the larger picture in mind.

 

[columbus]

Let me show you an example... I am using BSE Charting as it is mostly available to all freely and can serve to teach the technique.

The Scrip is Reliance. The first chart (Reliance BB70) provides the trend and entries from a swing perspective - this is the EOD Chart.

The second chart Reliance BB20 shows how to make a day trade keeping the larger picture in mind.

Hi Pradeep Narayan,

Thanks for putting the charts.

Choose a scrip ,which gives good amount of samples and also have good magnitude of
every CANDLE.Perhaps NIFTY falls in that category.

Comparing EOD chart with DAY chart is not right.

In previous post ,I compared them on a DAY TRADER perspective ,in NO way it is
inferior, after all ,I consider myself a STUDENT.

 

[timepass]

Let me show you an example... I am using BSE Charting as it is mostly available to all freely and can serve to teach the technique.

The Scrip is Reliance. The first chart (Reliance BB70) provides the trend and entries from a swing perspective - this is the EOD Chart.

The second chart Reliance BB20 shows how to make a day trade keeping the larger picture in mind.

Thanks Pradeep. very interesting technique. Calls for a lot of patience intraday because pierce of BB(20,3) won't happen very often in a day.

There is a large number of days between the buy and sell, how do you play swing in that period ?? There must be a lot of whipsaws.

BTW, to upload charts/images, load them on an external website and then paste the link here. Check my signature for the instructions.

 

[Pradeep Narayan]

First:- I am still a student too!! And Columbus has this wonderful thread that helped me learn this tool. I then developed my own twist to the taste

When I see such setups on stocks (on Nifty 50 or FnO) - I trade options on the long term. Buy ITM ones as trade and keep far OTM as insurance. On a daily basis, I trade this setup - it requires lots of chart-time as any 3/5 of the 150 FnO stocks will exhibit qualities for a day trade. I use this BB20,2 & BB20,3 technique and Gann for price targets.

I will give you a simple back of the hand working - take the LTP/Close for the day (any instrument)... based on the duration of the exchange where it is traded take 1/nth of the duration (ex. 1/6 for Nifty as NSE is traded 6 hrs daily)... apply Squareroot(LTP/Close)+/- 1/6, Squareroot(LTP/Close)+/- 3/6, Squareroot(LTP/Close)+/- 4/6, Squareroot(LTP/Close)+/- 6/6. Take the answers and square them for the day's trading range.

Eg. Scrip A is at 100, Sqrt(A) is 10. The positive movement is at (10+1/6) = 10.167, square that to get 103.4... similarly the lower band is 96.7... use this with BB20,2 and BB20,3 for better trading setups.

In my Reliance example the 1st trading range for tomorrow is 1001-981.. the BB70,1 is at 984 to provide support. So we can go long at 984 for 991 as target or short at 998 (BB20,2 Top) with SL as 1001 for 991 as target

 

[timepass]

My way of trading... I do EOD analysis with BB70,1 and EMA 21 crossover. In case I see EMA piercing the BB from TOP (at Top Band), I would plan for going short at every day till 8-10% of price target is achieved. Reverse logic when EMA approaches from BB Bottom.

That done, I would use a dual BB (BB20,2 and BB20,3) for entry and exits during day. The outer bands will be your SL points.

So, as per this technique, RCOM has become a buy on dips, right ? EMA 21 pierced BB(70,1) from bottom.

 

[Pradeep Narayan]

Correct.. Long around 105 with 95/100 as SL. Set TGT 120, time 2 wks. You can exit 60% at 112 to recover cost and let the balance run.

 

[timepass]

Correct.. Long around 105 with 95/100 as SL. Set TGT 120, time 2 wks. You can exit 60% at 112 to recover cost and let the balance run.

Similar pattern seen in Hindalco and Idea.

But the chart for Syndicate Bank confuses the rule. There may be another rule like "if there is a bullish crossover, buy above 21 ema" something like that.