Acceleration Bands Trading Secrets for Options

The Acceleration Bands trading system has been created by BidTrends and was mainly invented by the founder of BigTrends Mr. Price Headley. It was basically created because many traders suffer from moving averages. Whenever a stock or a commodity breaks out never retest major moving averages due to they are accelerating so furiously. So Mr. Price Headley created the acceleration bands to highlight this acceleration. big trends have also created a trading system out of the acceleration band.

I. Introduction

If you’re new to trading, you may be wondering what BigTrends Acceleration Bands are and how they can help you trade more effectively. In brief, BigTrends Acceleration Bands are a type of technical analysis tool that helps traders identify trends in the stock market. They are used to plot bands around a stock’s moving average to help traders identify potential breakouts and reversals.

II. Understanding BigTrends Acceleration Bands

To understand how BigTrends Acceleration Bands work, we must first define them. BigTrends Acceleration Bands are a type of trading indicator that is calculated using a stock’s price and volatility. They are plotted as two bands around a stock’s moving average, with the upper band representing the upper price target and the lower band representing the lower price target.

The importance of using BigTrends Acceleration Bands in technical analysis is that they can help traders identify potential breakout and reversal points in the market. By using these bands, traders can identify trends and make more informed decisions about when to enter and exit trades.

III. FAQ Section

IV. How to Use BigTrends Acceleration Bands in Trading

To use the acceleration bands trading strategy you can either use the BigTrends Toolkit available on the Metastock platform OR download the acceleration bands AmiBroker formula given below this post. We will use the acceleration bands of 20 bars in the parameter. Now check the screenshot below how this trading system looks like in Metastock:

This is a daily chart of Nifty, so this is an acceleration band for 20 days. You can also add other indicators to this chart. Now, how to trade acceleration bands. We know that 95% of price actions will take place inside the acceleration bands. So, how to trade the remaining 5% of price actions? The remaining 5% of price actions are when the price really moves. Those are strong trends. That is 5 % of the times you want to trade as the stock is moving really fast.

V. Rule of Acceleration Bands Trading:

1. Two consecutive closes outside the acceleration bands.
2. Trade with a tight stop.
3. We have seen that the bands are specifically useful in trading options.

Today, when I am writing this post-Nifty, is trading +0.2% higher at 8734, and remember yesterday’s budget day 2017 move on the upside. Was the up-move coincident? NO. Check the image above, Nifty BUY signal has been triggered on 25th January 2017 just a few days before the budget and zoom, and Nifty skyrocketed. Call options buyers have minted money with this. Watch the image below to understand how it works.

For Amibroker users I am giving a download link for Acceleration Band Amibroker AFL below. You can download the AFL from here and start acceleration bands trading with Amibroker too.

VI. Advantages and Disadvantages of BigTrends Acceleration Bands Trading

Using BigTrends Acceleration Bands in your trading strategies has its advantages and disadvantages. It is important to weigh both before deciding to use them in your trades.

Advantages of using BigTrends Acceleration Bands in trading:

• Easy to use: BigTrends Acceleration Bands are easy to use and understand, making them suitable for beginners and experienced traders alike.
• Helps identify trends: BigTrends Acceleration Bands can help identify trends in the market, which can help you make better trading decisions.
• This strategy can be especially helpful in trading naked options and can identify low-risk, high-reward trades.
• Helps set stop-loss and take-profit levels: BigTrends Acceleration Bands can help you set stop-loss and take-profit levels to minimize your losses and maximize your profits.
• Works well with other technical indicators: BigTrends Acceleration Bands work well with other technical indicators, allowing you to confirm trades and make better decisions.

Limitations of using BigTrends Acceleration Bands in trading:

• Not 100% accurate: No trading strategy is 100% accurate, and BigTrends Acceleration Bands are no exception. You should always use them in conjunction with other technical indicators to confirm trades.
• False signals: Like any technical indicator, BigTrends Acceleration Bands can give false signals and whipsaws, leading to losses if you rely solely on them.
• Maybe lagging: BigTrends Acceleration Bands may be lagging in certain market conditions, making them less effective in those situations.

VI. Conclusion

BigTrends Acceleration Bands can be a powerful tool in your trading arsenal, helping you identify trends, set stop-loss and take-profit levels, and make better trading decisions. While they have their limitations, they are still valuable technical indicators to consider using in your trades.

To get the most out of BigTrends Acceleration Bands, it is important to understand how they work, how to use them in trading, and how to combine them with other technical indicators. By doing so, you can improve your trading strategies and increase your chances of success in the share market or stock exchange.