Hi Rainier, I don't know if you remember this post:
Message 3523236
but that sums up my view of BB's.
I don't use them for trading decisions. As you say (well, using different words, but same idea), there's no reason a breakout should be confined within some arbitrarily selected number of standard deviations of previous closes; some stocks will, some won't. They're all but useless at getting us out of an impulse move that quickly retraces most of the move. They're probably more useful as an indicator of when equilibrium has been restored, but even that has its caveats.
In the "restored equilirium" sense, maybe they could serve as an indicator of when you "zero out and restart" the float turnover indicator you were working on.
They probably do serve as a good way to stay away from abrupt moves, and instead point out more controlled moves. That may seem silly on first thought, but abrupt moves don't fit everyone's trading style when all is said and done.
They seem great as they're rocketing up, but they also have a much higher probability of giving back much of the move in a short time, compared to the controlled move. Unless a person also has a method to detect when the odds are high of that retracement, the more controlled move up will likely leave a person with a better net return a few weeks later, and cost much less in the anxiety and frustration department.
I still find candles, trendlines, and volume hard to beat as the all-purpose core TA toolbox. I'm not saying everyone's toolbox should be based on these, but those are sort of the hammer, pliers, and screwdriver for me. Bollinger Bands wouldn't fall into the all-purpose category at all.
dh |
