Day Trading Strategies That Work Today
The markets are constantly changing, therefore day trading strategies that work today may be different from those that worked 10 years ago.
There are some tools that are timeless however, and one of those is Bollinger Bands, created by John Bollinger
Bollinger Bands measure the volatility in a market as the move from a high volatility cycle to a low volatility cycle. The can be used whether you trade stocks, futures, E-minis and Forex.
What you’ll learn from this video can be used by day trading and swing trading participants alike.
Enjoy the video and please leave your comments below.
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Welcome to the video. I’m going to teach you day trading strategies that work in today’s markets. I like to use these myself and you can use them with the current method that you are already using.
So this is what I really really like. It uses Bollinger bands. You can see the Bollinger bands on here, and I just use very typical settings of 2 standard deviations on a length of 20. You can test other inputs if you like to.
There are some common misconceptions about Bollinger bands. One of them is, for some reason new traders think that price moves between them so goes down to the bottom and then it goes up to the top one and then down to bottom one, then to the top one.
It’s supposed to hit the top and the bottom between every cycle. And that’s really not true at all. Now sometimes it will happen but that’s not really the idea of Bollinger bands. That’s one of the day trading strategies that work today.
HOW DO BOLLINGER BANDS REALLY WORK?
So the idea here is that it measures volatility. And there is a cycle in the market between high volatility times and low volatility times. What do I mean by volatility?
Volatility is when the market moves, makes a high and a low. And a high and a low. It’s that range. So we could say that’s a high volatility market in comparison to market that’s just making short ranges between the highs and the lows. That will be a low volatility market. Now these are non-trending. Volatility high and low. But the market could be moving in a direction as well. As we have here, we have a trend.
So one of the nice things about the Bollinger bands, by the way I do recommend John Bollinger’s book of “Bollinger and Bollinger Bands.” I’ve met him, nice guy. And that’s a great book too. And he is of course the ultimate expert. I guess he’s the one who invented these things. So he certainly knows a lot more about it than I do.
I then take this and I incorporate it into my own trading methodology. What I look for is a contraction of the Bollinger Bands and this is called a Bollinger Band squeeze. Very common trading method. Certainly did not make this up myself. I got it from others.
You’re looking for the Bollinger Bands to move toward each other, to get very close to each other. Here they are far apart, and here they are close together. So that indicates a low volatility cycle in the market. And what I’d like to do is then get in toward the end of that, when volatility comes back in. because I like to trade when there’s a lot of movement in the market. Where there is lot of range, lot of follow through because that determines my profits.
HOW TO USE DAY TRADING STRATEGIES THAT WORK TODAY
So how do I do that? That’s the big question. I wait until we’ve got these contracting together. Then I wait for them to start moving apart. Okay, see how they’re starting to move apart there. That’s the first indication that okay, we’ve got some increased volatility. Then I wait and I look for the last level. Either the lower Bollinger Band or the upper Bollinger Band, for the market to touch.
Look how it comes back and does not touch the other band. Does not touch the other band. So what that says is now the directional bias is down. It’s bearish. And I have also got my trend indicator which is confirming that as well that this is down, but I don’t want this to go up and hit the upper Bollinger Band, in order for the bias to be down.
We’ve got a cycle high here so this is about timing. That’s the whole thing, we’ve got trend down, the volatility is stronger on the down side than the up side. See how this move lasts longer in duration, time and price level than the retrace? That shows that there’s more bearish energy than bullish energy. That’s what you want, you want to trade in the direction of dominant energy.
TIMING YOUR ENTRIES AND EXITS
And then timing. This is our little timing indicator down here, this gives us the indication that time is ready to put in a high, and go back down in the direction of the dominant energy of the market. By the way if you are interested in this timing indicator. It’s really amazing and I am happy to give it to you absolutely free. Just send me an email at Barry@TopDogTrading.com.
I do live webinars where I give you the indicator and show you how to trade it. What signals are valid, what signals are not valid. And all of that. Takes about 30 minutes and it’s all for free. Simply send me an email and I will let you know whenever you email me, since these videos are out there for a long time, I don’t even know if I’d be offering it still when you happen to watch this video, but if I’m offering it, I will let you know when and where.
Okay, so now that we have got the dominant energy to the downside, touches the lower band, moves back up. By the way this black line, that’s a 15 EMA, look for that to hold. I don’t use the actual middle Bollinger band. I use the 15 EMA. And I want that to hold as resistance. And that shows again that if it can’t get above that, that shows energy to the downside, weakness on the retrace and we put all that together and then we look for to move back down, touch the lower Bollinger band again.
There is our move down, actually goes all the way down to here. That’s your lowest low. And then again we want, so we got strength to the downside, and then weakness moving back up. It goes to the 15 EMA, strength back to the downside, see how it actually will ride down the lower Bollinger band. It doesn’t even touch the upper one. That’s what you want for directional movements. That’s exactly what you want.
COUNTING WAVES IN A TREND
Now 5 wave pattern is about average for trend. And these aren’t Elliot waves. These are my own waves count. Here it goes down even further. Because it was so bearish. But we could, here again, comes back up to the 15 EMA. Another cycle high pattern. And it goes back down there again.
Now here is where I would get them. So it goes back up. Notice on this one, it comes back down but does not touch the lower Bollinger band. We get a cycle low and it does not touch the lower Bollinger band. To me that shows some weakness. And it is weakness. It’s, you still could have well close to the trading day here this specific time.
But for me, I am not going to tempt fate, it does make a lower low but for full disclosure and transparency, I just tell you I would definitely get out there because that is to me, in my mind signal of weakness is that it does not touch the lower Bollinger band here. So it is you know turns out to be a temporary decrease and you see here too, we get little bit of Bollinger band squeeze if you will, don’t know if statistically it is, but the lines are pulling back together again.
And hey we never know for sure when the final low is going to be in the trend or the final high. Nobody has that kind of foresight. The point is if you made some money, you’re doing good. If you got in here, and then you got out here. You’re done, good, be happy, take your money, go home and celebrate.
So that’s the Bollinger band technique. That’s how I use it along with. Can’t use it in isolation, or at least I don’t use it in isolation. But I use it with my trend indicator, cycle indicator, momentum and the wave counting.
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