Keltner Channels or Bollinger Bands?

This is a discussion on Keltner Channels or Bollinger Bands? within the Technical Analysis forums, part of the Methods category; Hey folks, Was doing a bit of reading on various indicators and I am aware that Keltner Channels are based ...

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Old Dec 27, 2017, 2:05pm   #1
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Keltner Channels or Bollinger Bands?

Hey folks,
Was doing a bit of reading on various indicators and I am aware that Keltner Channels are based on Average True Range, while Bollinger Bands is based on Standard Deviation.

For those of you that use 1 of these...
Why use one over the other?
Or
If you use both, how do you determine which to use at a given time?


Thanks in advance!
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Old Dec 27, 2017, 3:33pm   #2
 
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i tried both more than a few times...trying to fade i can't use either they don't help me. a trend just kills me can you help me use them effectively?
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Old Dec 27, 2017, 4:11pm   #3
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i tried both more than a few times...trying to fade i can't use either they don't help me. a trend just kills me can you help me use them effectively?
Are you just using that solely as your trigger for a trade?

When I use them I am looking for price to leave the channel but I am also looking at previous price structure to inform my view on where price might go or where price might struggle. In forex, fundamentals are quite important too, so that's another indicator that you need to keep in mind.

I am a fan of mean reversion trading, so when a trade is highlighted to me by the band/channel, my target is the mean of the channel (middle line of the 3)

It's still too early for me to know what's what, so be careful when listening to anything I say as it's influenced by a level of naivety.

Roughly speaking, I look for the direction that fundamentals indicate a particular pair is going in and then take setups to that side. So if for example the GBP/JPY fundamentals indicate to me that the GBP is stronger, then I will look for where price pops outside of the channel to the downside and then I go long. Targeting the mean

Perhaps those who actually know how to trade properly can give you a better answer
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Old Dec 27, 2017, 4:29pm   #4
 
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Are you just using that solely as your trigger for a trade?

When I use them I am looking for price to leave the channel but I am also looking at previous price structure to inform my view on where price might go or where price might struggle. In forex, fundamentals are quite important too, so that's another indicator that you need to keep in mind.

I am a fan of mean reversion trading, so when a trade is highlighted to me by the band/channel, my target is the mean of the channel (middle line of the 3)

It's still too early for me to know what's what, so be careful when listening to anything I say as it's influenced by a level of naivety.

Roughly speaking, I look for the direction that fundamentals indicate a particular pair is going in and then take setups to that side. So if for example the GBP/JPY fundamentals indicate to me that the GBP is stronger, then I will look for where price pops outside of the channel to the downside and then I go long. Targeting the mean

Perhaps those who actually know how to trade properly can give you a better answer
no worry appreciate your reply! hopefully few others will help here
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Old Dec 28, 2017, 1:44pm   #5
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Nowler started this thread Further to my initial post:

Are Bollinger Bands/Keltner Channels better suited to particular FOREX timeframes?
I ask because there are news releases very often, as in, fx is largely driven by news/economic policy, so perhaps this means that BB's/Keltner's are better suited for lower TF's as opposed to higher.

My logic here is that the longer the TF the more potential for a release of some sort to change sentiment. So using it (when price leaves the channel) would perhaps be better on a 1-4hr TF than say 1D or weekly...? Because the shorter the TF, the more chance I can get in and out before a release steamrolls me
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Old Dec 30, 2017, 3:31pm   #6
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Nowler started this thread Just going to bump this one last time before I let it die.

Perhaps those who use them or know a lot about them have been busy eating turkey and ham sandwiches
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Old Dec 30, 2017, 4:22pm   #7
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Quote:
Originally Posted by Nowler View Post
. . . Why use one over the other?
Or
If you use both, how do you determine which to use at a given time?
Hi Nowler,
There are hundreds upon hundreds of indicators out there, almost all of which come with default settings that each trader tweaks in an attempt to find the magic combo' that unlocks the door to untold riches. Add in the use of two or more indicators together and that makes the possible number of permutations almost infinite.

Now, you can go from one indicator to the next in search of the holy grail if you want - but I wouldn't recommend it. It's much better IMO to start at the end and work backwards. That way, you'll stand a much better chance of finding the right indicator and being able to determine the right settings for the job. So, for example, suppose you want a way to determine where to place your stops that isn't just above or below swing highs and lows - or obvious areas of S&R - which is where most traders put them. And you want to take volatility into account so that your stop is dynamic and in sync with the instrument you're trading. In this example, Keltner Channels may be helpful and are certainly worth considering.

Putting any and all indicators in a vacuum and trying to decide which is best is largely pointless because, without context, no indicator is any better or worse than any other. This assumes obviously that you feel indicators at least have some merit and aren't the spawn of the devil! So, to conclude, I suggest you answer this question: what is it that I want the indicator to do - what am I trying to achieve? Once you've got that answer, then finding the indicator that does what you want will be a whole lot easier.

If you've already done as I suggest and have boiled your choice down to Keltner Channels or Bolly Bands - then this article compares and contrasts the two.

Hope all that makes sense.
Tim.
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Old Dec 30, 2017, 4:50pm   #8
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Nowler started this thread Yes, that makes sense.
I'll make a cuppa and have a read of the link you gave me.

Thanks very much mate.
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Old Dec 30, 2017, 7:37pm   #9
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Nowler started this thread My brokers platform doesn't have Keltner's, but does have STARC bands... would that be close enough?
Surely if it's Keltner's (ATR based) that I want, then even if STARC bands weren't exactly "close", they would be closer than Bollinger's (SD based)?

Note: The "ATR" it offers is an indicator below the chart. Not bands on the chart
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Old Dec 30, 2017, 7:59pm   #10
 
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STARC is an acronym for Stoller Average Range Channels. The indicator is named after its creator, Manning Stoller.
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Old Dec 30, 2017, 9:25pm   #11
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My brokers platform doesn't have Keltner's, but does have STARC bands... would that be close enough?
Surely if it's Keltner's (ATR based) that I want, then even if STARC bands weren't exactly "close", they would be closer than Bollinger's (SD based)?

Note: The "ATR" it offers is an indicator below the chart. Not bands on the chart
Nevermind.
I'll test it out myself sure.

I've altered the setting of the STARC to the typical settings of a Keltner.
Granted this is an SMA instead of an EMA but I'l see how it goes.
I can always plot a EMA separately and just reduce the colour of the SMA so it's less visible... then again... that's not right either... meh...
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Old Dec 30, 2017, 11:57pm   #12
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Are Bollinger Bands/Keltner Channels better suited to particular FOREX timeframes?
I am afraid you are potentially entering what is commonly described as the death spiral in trading. You feel that your pathway to improvement is via better indicators or system and so you begin to search for a "better" tool. Unfortunately many traders can spent years in the wilderness searching but never finding "it". Hence it is called the spiral of death.

Quote:
Originally Posted by Nowler View Post
I ask because there are news releases very often, as in, fx is largely driven by news/economic policy, so perhaps this means that BB's/Keltner's are better suited for lower TF's as opposed to higher.

My logic here is that the longer the TF the more potential for a release of some sort to change sentiment. So using it (when price leaves the channel) would perhaps be better on a 1-4hr TF than say 1D or weekly...? Because the shorter the TF, the more chance I can get in and out before a release steamrolls me
If you cannot directly address timsk's question then you will not be able to address the TF question.
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Old Dec 31, 2017, 12:52am   #13
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I am afraid you are potentially entering what is commonly described as the death spiral in trading. You feel that your pathway to improvement is via better indicators or system and so you begin to search for a "better" tool. Unfortunately many traders can spent years in the wilderness searching but never finding "it". Hence it is called the spiral of death.
Hopefully not, but noted, thanks.
I feel I am just tasting a little bit of everything. Seeing what I like best or what I can follow more easily.

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If you cannot directly address timsk's question then you will not be able to address the TF question.
Tim said: "what is it that I want the indicator to do - what am I trying to achieve?"

I understand what Tim means here and it was taken onboard. This is a sensible way to look at it of course...the dog wagging the tail as opposed to the tail wagging the dog (or the tools working for me as opposed to...), but I haven't built up enough of an understanding about trading yet to be able to instinctively know what indicators best work for each different instance.

Therefore, I'm scanning through indicators, seeing what sort of approaches there are, ergo, building up a particular understanding which I reckon will get me to a level of competency where I can instantly rattle off which tools might best work for each situation I encounter.
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Old Dec 31, 2017, 1:28am   #14
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I haven't built up enough of an understanding about trading yet to be able to instinctively know what indicators best work for each different instance.
... your statement begs the question. Is your trader development about becoming a better trader or finding better indicator(s) in making trade decisions for you? This opens up a bunch of fundamental issues that in my view are important considerations. For example, is trading 80 % psychological? Your beliefs determine your time allocation in trader development.

One of the main issue in the search of a better indicator is that success or failure in trading is attributed to the "indicator" and not the "trader". You tweak, you curve fit and then eventually you move to another indicator. The effort is therefore on a better indicator rather than to become a better trader.
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Old Dec 31, 2017, 2:42am   #15
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... Is your trader development about becoming a better trader or finding better indicator(s) in making trade decisions for you?
The goal is to become the best trader I can be. I do that by understanding as best I can. I am merely looking around, trying different things, trying to better understand the puzzle I am dealing with. I am looking at this puzzle through different lenses... sometimes I will recognise a new perspective, sometimes I don't. Indicators are not at the top of my list of priorities, I am merely gathering information because they can be useful.


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This opens up a bunch of fundamental issues that in my view are important considerations. For example, is trading 80 % psychological? Your beliefs determine your time allocation in trader development.
Is that a rhetorical question or are you actually eliciting a response?
Saying that trading is 80% psychological is useful when trying to point out that psychology is very important...that it is often the biggest hurdle. But is it 80%? Is it 80% all of the time or only some of the time? Trading becomes less psychological the more you automate for example. So if you are eliciting a response then you have not supplied enough information for me to answer. At my level of trading proficiency I probably wouldn't be able to accurately quantify what % a particular style/strategy was anyway. But as I said, psychology is very often the biggest hurdle.

Quote:
Originally Posted by Brumby View Post
One of the main issue in the search of a better indicator is that success or failure in trading is attributed to the "indicator" and not the "trader". You tweak, you curve fit and then eventually you move to another indicator. The effort is therefore on a better indicator rather than to become a better trader.
I understand.
My first response in this post feeds in here also.

I need more time for the dust to settle.
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Last edited by Nowler; Dec 31, 2017 at 2:55am.
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