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Trading with Bollinger and Keltner bands
Although Volatility-based Bollinger Bands and Keltner Bands share many similarities, they differ in their construction.
While Bollinger Bands rely on Std Deviation calculations, Keltner Band uses Average True Range, in representing volatility.
Like Bollinger bands, Keltner Band signals are produced when the price action breaks above or below the channel bands and return to the median line.
Some traders use this combination as Volatility Squeeze Indicator:
when either of the bands, converges, a volatility Squeeze occurs, which lead to sharp moves, upon "opening up" of the bands.Bands pinching can take even weeks and on the break : will it be up or down ? We can use this indicator in a slightly different way.
Put an eye on charts: you can see that it can be applied far from a pinching move just following an up an down move around a median price.We would get advantage from bands crossing before a low or high peak.These examples are not a recommendation to buy or sell. Use at your own risk.
On September I have picked a few tickers to look for and made a backtest starting from 1September09 to 31December09 ...then next mounth I'll repeat the backtest on a new bunch of stocks ... I am looking for undervalued ones below in the table.
I report a new approach for trading...nowadays I am already backtesting it .I am exploring trends for Close and Volumes and before posting formula I need to check its profitablility. Please take a look at the below pane of the stock chart to investigate the signals of TS.
BackTest since 01/January Long No stop loss -- no Target profit -- $14 for round trading trip
For next Monday(22Feb2010) I'll post backtests of an improved TS I have slightly modified .... it does no seems so bad.
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