Like before, if the core system produces a buy signal the indicators you enabled would need to have underlying bull trends to validate the trade. This article try to sum up the answers to the questions [Read more This method doesn't work in sideways markets, only in volatile trending markets.
In trending markets price can, and does, walk up the upper Bollinger Band and down the lower Bollinger Band. Closes outside the Bollinger Bands are initially continuation signals, not reversal signals. This has been the basis for many successful volatility breakout systems.
The default parameters of 20 periods for the moving average and standard deviation calculations, and two standard deviations for the width of the bands are just that, defaults. The average deployed as the middle Bollinger Band should not be the best one for crossovers. Rather, it should be descriptive of the intermediate-term trend. For consistent price containment: If the average is lengthened the number of standard deviations needs to be increased; from 2 at 20 periods, to 2.
Likewise, if the average is shortened the number of standard deviations should be reduced; from 2 at 20 periods, to 1. Traditional Bollinger Bands are based upon a simple moving average. This is because a simple average is used in the standard deviation calculation and we wish to be logically consistent. Exponential Bollinger Bands eliminate sudden changes in the width of the bands caused by large price changes exiting the back of the calculation window.
Exponential averages must be used for BOTH the middle band and in the calculation of standard deviation. Make no statistical assumptions based on the use of the standard deviation calculation in the construction of the bands. The distribution of security prices is non-normal and the typical sample size in most deployments of Bollinger Bands is too small for statistical significance. The position within the bands is calculated using an adaptation of the formula for Stochastics.
BandWidth tells us how wide the Bollinger Bands are. The raw width is normalized using the middle band. Using the default parameters BandWidth is four times the coefficient of variation. So we have decided to make a little list of tools on how to get rid of this too-much-money-problem [Read more Crypto video library Here at Daytraderland we are getting a lot of questions about crypto currencies. But it is mostly questions about when to buy and not so much questions about the technology, the dangers, wallets etc.
Bitcoins — a matter of risk These days all I hear about is Bitcoins and crypto currencies, and I can see why. Not since the happy days of the dot-com bubble have we seen an Investment vehichle increase its value so [Read more Do your Forex homework As many of you know I write a 50 page market analysis every weekend to prepare for the week.
I have had a lot of questions about how I use this analysis in my daily [Read more The Eur [Read more As shown here in the weekly chart the sellers have been trying to push the price under the support line marked [Read more Would you spend 1. In this business where only a few traders stay on the top for years, Tudor [Read more What is blockchain technology?
A blockchain is basically a dispersed database of records or open record of all exchanges or computerized events that have been executed and shared among taking an interest parties. Every transaction is confirmed by agreement [Read more Listen to the exciting considerations and expectations of market [Read more When I reviewed my year read through my trading journal, I see that I have changed and modified my strategy several times throughout the year.
What does Price Action mean? We will try to cover exactly that in this article. That is certainly what I have experienced. This book — The Power of Habbit — [Read more There will probably be a lot of [Read more Review of London Capital Group 4. LCG is a well-known English broker, which has been around for 14 years. They offer trading [Read more Daytrading with fractals When we teach daytrading around the country, fractals are always a constituent part of the curriculum.
Fractals help make it easier and more objective where to draw the trend lines, support and resistance levels, etc. Why backtesting is important I was just updating my statistics on one of my mechanical strategies, which is something I do every quarter.
This is a strategy that exploits the gap between the closing price on Friday and the [Read more Mean Reversion — make money going against the trend In the last article we reviewed the trading style Trend following. In this article we will look at the opposite, namely Mean Reversion trading.
In this article we discuss the following: What is Mean Reversion? I will share one of these simple strategies with you here.