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Dear Traders,
this is the fourth article in my series Bollinger Band Strategy for Trending Markets. In the first article (December 2014) I described how you get in and out of the trade when we are in a trending market. In the second article (January 2015) it was all about managing Stops and Take Profits. The third article (February 2015) was part 1 of how to determine a sideways market.
This is the part 2. In this second part we go further into the selection of the underlying moving average.
I keep the selected chart with the same settings as in my last article so you can easily compare the different settings. So, let’s go with the EURUSD pair on a daily chart.
First of all, I want to include the standard Bollinger Band settings. The underying moving average there is the EMA – Exponetial Moving Average.
EURUSD, Daily, EMA - Exponential Moving Average (standard setting)
When comparing to the following charts, you see the flaws of the EMA and how you can select a better match.
EURUSD, Daily, KAMA – Kaufman Adaptive Moving Average
The Kaufman adaptive moving average KAMA was developed by Perry Kaufman. He presented it in his book "Smarter Trading" in chapter "Smarter Trendfoll…
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VictoriaVika avatar

Insightful - very well done!
There are some useful tools introduced informative and helpful. A brilliant article, good luck :)

Airmike avatar
Airmike 6 Mar

To many MA. but like anyway :)

anna_t avatar
anna_t 6 Mar

good!))

Olga18375 avatar

Well done!!! Nice article)

Nihad avatar
Nihad 19 Mar

Interesting,Good luck

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11/45
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Dear Traders,
this is the third article my series Bollinger Band Strategy for Trending Markets. In the first article (December 2014) I described how you get in and out of the trade when we are in a trending market. In the second article (January 2015) it was all about managing stops and take profits.
In this one, it will be all about how to determine a sideways market. This is the time frame, when we don’t trade at all, since we have no underlying trend. Don’t underestimate this – staying aside and waiting for good opportunities is a big part in successful trading.
Te keep things simple and concentrate on the active trades I showed that you are in a trending market when the middle line of the Bollinger Bands is consistently rising or falling. When this middle line – which is just a moving average – is flat or directionless, we are in a sideways market.
This all is completely true, but we can do better: In standard Bollinger Band settings the middle line is a exponential moving average. The parameters don’t matter that much, the key is to keep them on a fixed level to get the feeling how they move.
Back to the middle line - there are numerous ways to alter that line. Jforex is …
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Milian avatar
Milian 27 Fev

хорошая работа!

verindur avatar
verindur 27 Fev

Thank you : )))))

garisan avatar
garisan 27 Fev

Interesting. Me myself like the wma because I don't like the line continuously touching the candles. Also another indication of a possible consolidation is when start to appear goups of very short candles side by side, when that happens you have to watch carefully. Waiting for 2nd part :)

fullmoon avatar
fullmoon 28 Fev

Hi @garisan, short candles or long candles, like the four above in week 6. Reading Price Action is fun. When I trade my Bollinger Band strategy, I try to keep the Bands always on and only adjust the underlying MA. WMA works great with slightly adjusted parameters, then it's not that slow.

Annuuta avatar
Annuuta 28 Fev

Well done!)

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