BollingerWorm !!!

[murthyavr]

Dear Columbus,

Here is today's 5min MINIFTY-1 chart :

1. At the places marked as 1 and 2, the SMA-20 line has cut the EMA-2L line alone.

2. In between these two places, upper BB(20,1) has cut the EMA-2H line alone.

Though it means that the trend is about to end, the uptrend in fact has continued
for some more time and made a new peak.

I would like you to suggest possible steps to be taken at such places.
Do we keep tighter stop losses or do we exit the trade there?

 

[columbus]

1. At the places marked as 1 and 2, the SMA-20 line has cut the EMA-2L line alone.

2. In between these two places, upper BB(20,1) has cut the EMA-2H line alone.

Though it means that the trend is about to end, the uptrend in fact has continued for some more time and made a new peak.

I would like you to suggest possible steps to be taken at such places.
Do we keep tighter stop losses or do we exit the trade there?

1.At 2 (in your chart), SMA-20 has cut ema-2L ,at 2 places,indicating change of trend.

I have marked Entry & Exit points as per my chart.As far as possible ,try
to capture points outside MAIN bollinger band BB(20,2).Points within this
boundary may not give good Nifty points, but certainly can be ADDed.

Your chart is good.Please ,Keep the chart squarer rather rectangular.It should not overshoot the page because it will spoil the layout of the page.

 

[murthyavr]

Dear Columbus,

I was under the impression that an Entry/Exit triggers when whole of the EMA
band (both 2H and 2L lines) comes out of BB bands and make a re-entry.

Now as per your chart, I understand that it's enough even if one EMA line comes
out of the BB bands and makes a re-entry, to make an Entry/Exit. Hope my
understanding is correct. Please correct me, if I am wrong..

And about my chart. Yes, using a black background takes out two BB bands
from the chart (but still being rich visually) and that way, we can have lesser
number of lines. Too many lines are causing confusion.

I will reduce the size of the chart the next time..

 

[columbus]

Dear Columbus,

I was under the impression that an Entry/Exit triggers when whole of the EMA
band (both 2H and 2L lines) comes out of BB bands and make a re-entry.

Now as per your chart, I understand that it's enough even if one EMA line comes
out of the BB bands and makes a re-entry, to make an Entry/Exit. Hope my
understanding is correct. Please correct me, if I am wrong..

And about my chart. Yes, using a black background takes out two BB bands
from the chart (but still being rich visually) and that way, we can have lesser
number of lines. Too many lines are causing confusion.

I will reduce the size of the chart the next time..

Dear murthyAVR,
Both EMAs coming out of BB is rare.Generally we capture points ,where
candles come out and go into bands. (Case.1 and Case.2)
A BUY is placed when ema-2L comes into Lower BB and SHORT is placed
when ema-2H comes into Top BB.(After leaving the bands)

CASE.I
The downward trend was in tact,the entry is marked here.

CASE.II
Entry is marked here.But still another opportunity exits in 10 ten minutes.
Either we can ignore it as there is no ample reason or we can use it as
another add, if your CASH book is strong.

Multiple entry/exit points is possible in OPTIONS rather than futures
since ,as they are cheap,that is way it is preferable to trade with options.

Regarding your chart,it is good but keep it small and see that the frame
is square.

 

[trade4joisar]

Hello Columbus,

I have done setup of this in icharts software.

Can you please verify whether i have done correct settings or not ?

If possible can you also mark entry & exit point in this image?

Uploaded with ImageShack.us

 

[columbus]

Hello Columbus,

I have done setup of this in icharts software.

Can you please verify whether i have done correct settings or not ?

If possible can you also mark entry & exit point in this image?

Uploaded with ImageShack.us

Hello trade4joisar,

Good.I have gone through your chart.Just you make 3 of changes.

1.EMA-20 follows closely SMA-20.So you plot SMA-20 since it divides
the Bollinger Band into 2 exact halves.

2.Introduce another Bollinger Band pertaining to BB(20,1).

3.Is it possible to draw lines ema 2L&2H ,a bit thicker?

Please change TF from 3 min to 5 min.Make the chart ,a square one.(if
possible)

 

[trade4joisar]

Hello trade4joisar,

Good.I have gone through your chart.Just you make 3 of changes.

1.EMA-20 follows closely SMA-20.So you plot SMA-20 since it divides
the Bollinger Band into 2 exact halves.

2.Introduce another Bollinger Band pertaining to BB(20,1).

3.Is it possible to draw lines ema 2L&2H ,a bit thicker?

Please change TF from 3 min to 5 min.Make the chart ,a square one.(if
possible)

Thanks for your quick reply.

Uploaded with ImageShack.us

I am not sure how can i make it bit thicker

EMA 20 is coming by default, not sure how to remove it.

Can you mark entry & exit point (Long/short) in this chart?

 

[murthyavr]

Great, Columbus..

In fact when I was following this thread 5 or 6 months back - I observed the cases
of the EMA band going only half way up and turning backwards. And vice versa also.

But now, with your 6th condition, the exit rules have become more realistic and help
avoiding the encounters with StopLosses!

Conceiving an idea, translating it into an executable module, refining it periodically -
it's all a great creation.

Keep the good work going!

On my part, I will be following the method more keenly hereafter, try to contribute
my observations to the thread..

And, thanks for your detailed reply with charts..

 

[columbus]

Thanks for your quick reply.

Uploaded with ImageShack.us

I am not sure how can i make it bit thicker

EMA 20 is coming by default, not sure how to remove it.

Can you mark entry & exit point (Long/short) in this chart?

Hi trade4joisar,

Here goes the entry and exit points.

 

[trade4joisar]

Hi trade4joisar,

Here goes the entry and exit points.

Thanks. :thumb:

So here is my understanding

* 1st entry because after candle comes out of worm, reenters again
* Exit because again candle goes out of worm
* 2nd entry same as first
* Exit same as above
* 3rd entry same as first
* Exit same as above

I do not understood one thing

Why there is not entry point 2 candles before 3rd entry where previous candle was out of worm, any reason?