TRADING BOLLINGER BANDS
Trading Bands are a great tool to use for reference points of market swings. Markets tend to swing back and forth inside of trading bands.
Market tops and bottoms are made on divergences. Look for M type tops and W type bottoms. These patterns are simply double tops and bottoms.
MARKET TOP
Markets normally make a top when it makes a high confirmed by technical analysis indicators. Then it will have a decline against the trend and then make a new high with the indicators making a divergence. This is a M top or double top and a trading opportunity. If the market makes the second top way above the first top this is probably not a double top and the new high top becomes the first top of the M top.
MARKET BOTTOM
Everything the same as tops only vise versa
Use Weekly Stochastics to tell tops and bottoms.
Great indicators to use for divergence on the daily charts are the 14 day RSI, 14 day CCI, 14 day stochastics, MACD, ETC.
Use minor pivots points and chart patterns as entry signals with the trading band trend for short term trands and to get aboard a trending move.
Any 1 or more day pull back in a strongly trending market can be used as an entry point when the market goes back with the current trend.
A close outside of the bands coming off a market bottom or a market top is an indication of strength in the direction the market closed outside of the bands.
A close outside of the band at a market extreme can signal the end of the move and is a low risk entry signal when the market closes back inside the bands. All trades the STOP if wrong is the last pivot before entering the trade.
Sometimes you might have to enter the market more than once to get catch a high , a low, or get aboard a trend move. This is not a problem as long as we use our STOPS and only take small losses on our entry attempts. When we get in the trade right it will pay for the small losses and then some.
Add contracts on the 2-3-4 attempt to get in the market. When you hit it right this will helps pay for the small losses. If it is to much risk for you to do this, don't do it. Only trade the amount and size of contracts your comfortable with.
When the bands narrow down this is low volitility and an Option buying opportunity as the market is getting ready to move.
When the bands expand this is the time to sell what we bought when the band contracted,, don't buy options during high volitility.
===================================================================
4 SP500 4 StockOptions 4 Forex 4 Futures Software 4 StockTraders
4 CommodityOptions 4 ShortTermTrading 4 Futures 4 ForexPairs
===============================================================
Page Trading - FREE SP 500 Trial
The World's #1 SP Forecasting Service - Please Click Here !
=================================================================
10 Steps to a Successful Trade - Please Click Here !
Disclaimer - I am not a commodity trading advisor. The information on this site is for trading education only. There are no trading recommendations for any one individual made on this site and this information is paper trades for trading education. All trades are extemely risky and only risk capital should be used when trading.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.