Here's an idea of when to try to trade against the overall trend. This is the ONLY time that this works. First you have to use the "bollinger bands on bollinger band width" indicator that I've posted on this thread. What you look for is an extraordinary spike up in volatility. What you will see is the bollinger band width line go nearly vertical. What you look for is the bollinger band width line to duck back inside the upper bollinger band. Then simply place a trade against the trend. You usually see these after a big drop. One to watch that may be about to do this is CIEN (Cienna). Watch it closely and exit based on hooks on 5 day stochastics. The 5 day stochastics will give an accurate top when going long against the trend and it will also give an accurage bottom when shorting on an uptrend.
Here's a repost of the "Bollinger Bands on Bollinger Band Width" Post:
Here's an indicator I use to help project what the future volatility is going to be--so I have some clue as to whether price will move sufficiently to make lots of dollars. I call the indicator "bollinger bands on bollinger band width". Its four formulas. What is does is measure the width of the bollinger bands drawn on price. It then draws bollinger bands for the width line--so you have an idea when the bollinger bands are at their narrowest point or their widest point. Narrowest means upcoming price volatility and wide means upcoming consolidation/decreased volatility. This indicator has helped me greatly stay away from trading situations where the price isn't going to move a lot one way or the other. Its also helped me write covered calls and buy calls and puts.
FORMULA ONE:
mov((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,s)+ std((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,1.5)
FORMULA TWO: mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s)
FORMULA THREE:
mov((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,s)- std((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,1.5)
FORMULA FOUR:
mov((mov(c,peri,s)+std(c,peri,2)-(mov(c,peri,s)-std(c,peri,2)))/mov(c,peri,s),peri,s) |
