Sensex

Thursday, November 12, 2009

Re: [Technical-Investor] Bollinger Bands Tips.

 

Hi Floyd,

Thanks for your encouraging words. Except the usual text book explanation I dont have the kind of notes like the BB.
However the following points "What you should NEVER do" might be of some use.

• Never buy when the line drops below 30.  You must wait for it to cross back up.
• Never sell when the line crosses over the 70 area.  You must wait for it to drop back down.
• Do not trade when the indicator enters the overbought area or over sale, rather do it when you leave those areas confirmed with other indicators.

This may be the warning not to get caught in the trend continuation (with a trade on hand in the opposite direction).

Like you, I also feel it would of immense help, if members can post "tips and tricks" they personally experienced with the indicators or they read some where.

Warm regards,

Jayakrishnan.


--- On Thu, 11/12/09, FLOYD JOHNY LEWIS <fjl24@yahoo.com> wrote:

From: FLOYD JOHNY LEWIS <fjl24@yahoo.com>
Subject: Re: [Technical-Investor] Bollinger Bands Tips.
To: Technical-Investor@yahoogroups.com
Date: Thursday, November 12, 2009, 11:31 PM

 

Hi Jayakrishnan
 
From the shoes of a newbie learning to trade on intra-day charts - This was a gem of a post.
 
Need to study it in greater details for confirming it though.
 
Would appreciate if you or anyone on this forum can post something similar for the RSI (other than the much spoke about concepts of divergences, overbought, oversold) - something different much in lines with the BB bands observations.
 
Thanks in advance
Best Regards
Floyd


--- On Thu, 11/12/09, Jayakrishnan <jayakrish2001@ yahoo.com> wrote:

From: Jayakrishnan <jayakrish2001@ yahoo.com>
Subject: [Technical-Investor ] Bollinger Bands Tips.
To: Technical-Investor@ yahoogroups. com
Date: Thursday, November 12, 2009, 11:42 AM

 
The key is how the bands react to approaching price action. Here is the magic formula.

We'll use Bullish reversal's and continuations for this example and the opposite is true for bearish reversals or continuations.

1.) Price approaches the upper band and the upper and lower bands remain flat. Reversal - Likely a sharp reversal to the lower band. Because both bands are flat this will likely be short lived.

2.) Price approaches the upper band and the upper band goes up and the lower band is flat or moving up slightly. Continuation - Price will likely continue up slowly for a time.

3.) Price approaches the upper band and the upper band goes up and the lower band goes down. Continuation - Price will likely move up fast and furious. This is the best continuation pattern for the bands. This is a rapid expansion of volatility. You will experience "fake out's" sometimes but most of the time this set-up will produce some good profits when executed properly.

4.) Price approaches the upper band and the upper and lower bands both go down. - Reversal - This is likely to result in a reversal but keep in mind price will likely only make it to the mean, the 21 period moving average with both bands heading down like this. This is a rare occurrence and is typical of a bigger market swing. A transition from Bullish to Bearish conditions.

Your best bet is to pull up 10 charts and spend some time observing how the bands react to approaching price action..

Source: http://tycoonreport .tycoonresearch. com/articles/ 871111841/ bollinger- bands-a-long- overdue-second- date



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Posted by nsivaa at 4:01 PM

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