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Re: Bollinger Band Systems



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Steve:
Thank you for posting this. Not only have you 
posted a good indicator, but your methodology suggests how to change an 
indicator into something more useful.
 
Warm Regards
Lionel Issen<A 
href="mailto:lissen@xxxxxxxxxxxxxx";>lissen@xxxxxxxxxxxxxx
<BLOCKQUOTE dir=ltr 
style="PADDING-RIGHT: 0px; PADDING-LEFT: 5px; MARGIN-LEFT: 5px; BORDER-LEFT: #000000 2px solid; MARGIN-RIGHT: 0px">
  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  Steve 
  Karnish 
  To: <A 
  title=Metastockusers@xxxxxxxxxxxxxxx 
  href="mailto:Metastockusers@xxxxxxxxxxxxxxx";>Metastockusers@xxxxxxxxxxxxxxx 
  ; <A title=metastock@xxxxxxxxxxxxx 
  href="mailto:metastock@xxxxxxxxxxxxx";>metastock@xxxxxxxxxxxxx 
  Sent: Monday, September 17, 2001 12:05 
  PM
  Subject: Bollinger Band Systems
  
  List,
   
  I really don't have the foggiest idea what the 
  "Bollinger Band System" is (whether provided by Bollinger or the Equis 
  add-on).  The following discussion is an overview of how I have 
  manipulated the formula during the last few years.  Since there seems to 
  be a growing interest in this area, I thought I might "spill" a few ideas, on 
  the forum, and see if any list-members can improve and contribute ideas 
  to this framework.
   
  First, let me say: among all of the public, 
  "talking head", commentators, I consider John to be one of the good 
  guys.  After attending graduate biz school, at an advanced age, I was 
  delighted that there was a practical application involving one of the few 
  things I learned while attending school: standard deviations.  
  
   
  Of course, we all know, I think, that those 
  crooked little lines that tend to bracket the price range are points on the 
  chart that represent (in John's formula) two standard deviations from the 
  mean.  I like that concept, but I hate those crooked lines.  As some 
  of you know, I've taken the information contained in the Bollinger formula and 
  changed it to allow the information to look a bit more logical (my subjective 
  opinion).
   
  Instead of the crooked lines (the daily 
  adjustment representing the two standard deviations from the mean), I prefer 
  to convert the crooked lines into straight lines and chart the standard 
  deviations as parallel lines.  In this restructured formula, the price is 
  plotted as a percentage of the distance between the chosen standard deviations 
  (see attachment "1").
   
  The "new, improved" formula is:
   
  <FONT face=Arial 
  size=2>((C+2*Std(C,20)-Mov(C,20,S))/(4*(Std(C,20)))*100)
   
  I suggest adding horizontal lines at 0 (zero) and 
  100 (and now, a trader can compare and see that we are just representing the 
  information in a different "light").
   
  Next, it's an easy step to implement a "system" 
  ... for example:
   
  {Enter Long positions when the indicator 
  closes below 0Enter short positions when the indicator 
  closes above 100}
   
  Enter Long: 
  <FONT face=Arial 
  size=2>Cross(0,Ref(((C+2*Std(C,20)-Mov(C,20,S))/(4*(Std(C,20)))*100),-1))
  Enter Short:
  <FONT face=Arial 
  size=2>Cross(Ref(((C+2*Std(C,20)-Mov(C,20,S))/(4*(Std(C,20)))*100),-1),100)
   
  This "crude" approach returns 130 cents and 
  has an 10 & zero track record when forced onto 
  the December Wheat '01 contract (see attachment "2"). 
   
  I suggest optimizing variables within the 
  formula.  It's easy to explore results by varying the "trigger" levels, 
  the mean, or the standard deviations.
   
  If you want to apply the "approach" to day 
  trading the naz or s&p, try stepping down to the "ever-popular" ten 
  period-ema.  Use the 10ema and experiment with a stepped down version 
  that explores penetrations of only one standard deviation.  
   
  The combinations are endless.  This approach 
  is just that: an approach.  Filters, trend identifiers, combinations and 
  modifications are all possibilities.  This 
  is not the holy grail.  It just is a jumping off point for those who 
  would like to explore the realm of price (buried in an average) and it's 
  relationship to standard deviations.
   
  Hopefully, this will stimulate a trading 
  discussion that will benefit our forum.   If we don't get back to 
  the purpose of this forum, it might as well fold up and blow 
away.
   
  Take care,
   
  Steve Karnish, CTACedar Creek Trading<A 
  href="http://www.cedarcreektrading.com";>http://www.cedarcreektrading.com