CANDLECODES AND BOLLINGER BANDS Editor, I liked very much Viktor Likhovidov’s use of Bollinger Bands on an indicator in “Light Up Your Trading System With CandleCode Trading” (STOCKS & COMMODITIES, September 2001). Figure 5 on page 26 nicely demonstrates why this technique is so powerful. (Though I am leery — as I always am of optimization — of the optimized parameters used later in the article.) As Likhovidov astutely observes, fixed indicator levels rarely serve well. The markets evolve, and that evolution is portrayed in indicator action; this year, one set of levels serves well, while the next year, another set of levels will be needed. The key to this problem is to employ an adaptive approach such as Bollinger Bands. P.S. I wish you well in your new post as editor of STOCKS & COMMODITIES. I am a big fan of the magazine and I am sure you will uphold its fine tradition of excellence. JOHN BOLLINGER, CFA, CMT |
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