A few days ago I had written on Acceleration Bands in my post here: Acceleration Bands Trading – New Way To Trade Options. So, as we know that the acceleration bands has been developed by Price Headley the founder of BigTrends and he has also developed the Big Trends Toolkit for Metastock that has the experts and explorations built-in.
The main objective of the acceleration bands is to find extreme price movements. And also to catch the rare 5% moves when the price of a scrip really accelerates. That time price starts moving away from the moving averages and the world’s most furious moves actually happen outside of the acceleration band. In my last post on acceleration bands, I had given the Amibroker AFL for the acceleration band to my readers. Now let’s try to develop a trading system out of that. As we know that we need two consecutive bars outside of the acceleration band to generate a buy signal. So my Amibroker code for the buy logic is very simple, the code is as follows:
Buy = C > Upper band AND Ref (C,-1) > Upper band AND NOT Ref(C,-2) > Upper band;
I have also added the sell, short and cover logic as per Price Headley’s Big Trends Toolkit Metastock formula and now I applied the chart on my Amibroker to load Acceleration Bands Trading System in my Amibroker exactly as Big Trends Toolkit.
Combining Acceleration Bands With William Percentage R:
Price Headley actually scanned the breakouts using Acceleration Bands and then waited for a pullback the William Percentage R. He named the trading system as Percent R Retest System. He made a special type of Percent R by using a 30-period William Percentage R increased by 100. So once the breakout happens in acceleration bands we need to start watching the scrips.
For buy wait for the Percent R to go above 80 and then retest below 80 and for short sell wait for the Percent R to go below 20 and then retest above 20. See the above image. You can trade Options with good accuracy using this method. You can also develop a full trading system with explorations in Amibroker if you have some coding knowledge.