I'll have to look for that back issue of TASC. I use StochRSI in my system to limit the sell signals. I've submitted a paper on it for the TAOTN book. The system is flawed, of course, but maybe I can eventually improve it. The gist of it now is: Buy when price crosses up through the lower band, and sell when price crosses back down through the upper band, when StochRSI has crossed back down through 70, and when the upper Bollinger band is higher than an upper envelope line. I don't think you can use the lower envelope line to limit buy signals, because the Bollinger bands already limit them too much. It would be better, in fact, to give the system more slack with buy signals, and work out a formula involving the moving average. Frequently, price doesn't fall to the lower band, but rallies at the moving average.
Another approach that occurred to me only last night might be to use a weekly chart with the bands. The Worden Bros. pointed out something interesting in Intel's chart last night: While the price is at the bottom of an envelope channel on a daily chart now, it's not at the bottom on a weekly chart. In fact, it's still high in the channel and not at the moving average yet. When I read that, I thought, "Lo!" Not "Low!" but lo. This might be obvious to experienced TA'ists, but I'm a newbie with all of this, and that was quite a revelation. Maybe it's worth looking into the B bands on weekly charts.
For the time being, though, I'm just glad I sent my newbie article off to Richard. I'm all tuckered and tinkered out with the B bands (for a couple of days at least). |
