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Thread: THE BOLLINGER BANDIT TRADING STRATEGY

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    THE BOLLINGER BANDIT TRADING STRATEGY

    Standard deviation is a number that indicates how much on average each of the
    values in the distribution deviates from the mean (or center) of the distribution.
    Bollinger Bands, created by John Bollinger in the 1960s, is an indicator that uses
    this statistical measure to determine support and resistance levels.
    Their is this saying "go to where you are celebrated and not to were you are tolerated" in IAFT you are celebrated.

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    This indicator
    consists of three lines and is very simple to derive; the middle line is a simple
    moving average of the underlying price data and the two outside bands are
    equal to the moving average plus or minus one standard deviation. Based on
    theory, two standard deviations equates to a 95 percent confidence level. In
    other words, 95 percent of the time the values used in our sampling fell within
    two standard deviations of the average. Initially, Bollinger Bands were used to
    determine the boundaries of market movements. If a market moved to the
    upper band or lower band, then there was a good chance that the market would
    move back to its average. We have carried out numerous tests on this hypothesis
    and seemed to always come back with failure. Instead of using the upper
    band as a resistance point, we discovered, as others have, that it worked much
    better as a breakout indicator. The same goes for the lower band.The Bollinger
    Bandit uses one standard deviation above the 50-day moving average as a potential
    long entry and one standard deviation below the 50-day moving average as
    a potential short entry.
    Their is this saying "go to where you are celebrated and not to were you are tolerated" in IAFT you are celebrated.

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    So, for the Bollinger Bandit, we incorporated a more
    aggressive trailing stop mechanism. When a position is initiated, the protective
    stop is set at the 50-day moving average. Every day that we are in a position,
    we decrement the number of days for our moving average calculation by one.
    The longer that we are in a trade, the easier it is to exit the market with a profit.
    We keep decrementing the number of days in our moving average calculation
    until we reach ten. From that point on, we do not decrement. There is one
    more element to our exit technique: the moving average must be below the
    upper band if we are long and above the lower band if we are short. We added
    this element to prevent the system from going back into the same trade that we
    just liquidated. If we hadnít used this additional condition and we were long and
    the moving average was above the upper band, the long entry criteria would still
    be set up and a long trade would be initiated
    Their is this saying "go to where you are celebrated and not to were you are tolerated" in IAFT you are celebrated.

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    Previously, we stated that the upper band and lower band were potential
    buy/sell entries. Potential is the key word. One more test must be passed
    before we initiate a position; the close of today must be greater than the close
    of 30 days ago for a long position and the close of today must be less than the
    Trading Strategies That Work 115
    close of 30 days ago for a short position. This additional requirement is a trend
    filter. We only want to go long in an uptrend and short in a downtrend.
    The Bollinger Bandit requires four tools: (1) Bollinger Bands, (2) a moving
    average of closing prices, (3) a rate of change calculation, and (4) a counter.
    This system is longer term in nature, so we will use 50 days in our calculations.

    Bollinger Bandit Pseudocode

    LiqDay is initially set to 50
    upBand = Average(Close,50) + StdDev(Close,50) *1.25
    dnBand = Average(Close,50) - StdDev(Close,50) *1.25
    rocCalc = Close of today - Close of thirty days ago
    Set liqLength to 50
    If rocCalc is positive, a long position will be initiated when
    today's market action >= upBand
    If rocCalc is negative, a short position will be initiated when
    today's market action <= dnBand
    liqPoint = Average(Close, 50)
    If liqPoint is above the upBand, we will liquidate a long position if
    today's market action <= liqPoint
    If liqPoint is below the dnBand, we will liquidate a short position
    if today's market action >= liqPoint
    If we are not stopped out today, then liqLength = liqLength - 1
    If we are stopped out today, then reset liqLength to fifty
    Their is this saying "go to where you are celebrated and not to were you are tolerated" in IAFT you are celebrated.

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    THE GHOST TRADER TRADING STRATEGY
    The code for the Ghost Trader is designed more as a template than a complete
    trading strategy. Some trading strategies incorporate the success of the last
    trade signal in the calculation/determination of the next trade signal. We have
    tested several methodologies that only initiate new positions after a losing
    trade. Some traders feel that there exists a high probability of failure on the
    next trade signal if the last trade was closed out with a profit. This approach is
    much easier to trade than historically back test. Itís easy to keep track of your
    trades and then skip the hypothetical trades that donít meet your criteria. In
    our example of waiting for a losing trade before initiating a new trade, you
    would simply stop trading your account after a winning trade and start paper
    trading and wait until you have a loser on paper. Once a paper loser occurs, the
    next trade would be initiated in the real world. The code for Ghost Trader
    demonstrates how to keep track of simulated trades and only issue the trades
    that meet a certain criteria.
    Their is this saying "go to where you are celebrated and not to were you are tolerated" in IAFT you are celebrated.

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    The core trading strategy of the Ghost Trader is based off of an exponential
    moving average and a RSI indicator.
    if(marketPosition = 0 and myProfit < 0 and Xaverage(Close,9) >
    Xaverage(High,19) and
    RSI(Close,9) crosses below 70) then
    begin
    buy next bar at High stop;
    end;
    if(marketPosition = 0 and myProfit < 0 and Xaverage(Close,9) <
    Xaverage(Low,19) and
    RSI(Close,9) crosses above 30) then
    begin
    sellShort next bar at Low stop;
    end;
    Long positions are initiated on the next day at todayís high on a stop order.
    This order is only issued if the nine day exponential moving average of closes
    is greater than the 19 day exponential moving average of high prices and the
    nine day RSI of closing prices is crossing from above to below the 70 reading.
    Short positions are initiated in just the opposite fashion. Long positions are liquidated
    if todayís market action penetrates the lowest low of the past 20 days
    and short positions are liquidated if todayís market action penetrates the highest
    high of the past 20 days. These entry/exit techniques are interesting but are
    not the main focus of the Ghost Trader. The main focus of the Ghost Trader
    is to keep track of a trading system and issue only the trade signals that meet a
    certain criteria. In our case, actual trade signals should only be issued after a
    real or simulated losing trade. The following code keeps track of all tradesó
    real and simulated.
    Their is this saying "go to where you are celebrated and not to were you are tolerated" in IAFT you are celebrated.

  7. #7
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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    Dking123, Please can you explain us in simple steps about this Bollinger bandit trading system as all the above information looks to me very hard to understand ...but feeling very interested ...just some simple version will be appreciated from you. :heat:

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    I would also like to have some simple explanation of bollinger bands as I have not used these bands in my trading. It might add to my trading style which can bring me more profits.

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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    @imbest even i don't have any idea about bollinger bandit i hope it will be more profitable to us and i just started learning about it and i hope i can able to make profit with it too as its forex trading anything can happen but its better if i should not fully depend on it and i think it will be good and more profitable to us and as i seen many of my friends are in profit because of it but i am just trying it now i hope i can able to take right and profitable decision .
    Change Your self If you wish to change the world

  10. #10
    Senior Member kalex76's Avatar
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    Re: THE BOLLINGER BANDIT TRADING STRATEGY

    Actually the upper explanations need some simple version with images to make everyone benefited from this ..i saw it in the trading platform and heard many good things but never used that. :good3:

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