I got in another hour of Live on the Margin today. I decided to go back and re-read some of the material on fade trading to make sure I'm really getting it. Pretty sure I've got it locked in at this point.
The strategy (from memory) is to watch for a stock you know well to touch its 3rd Bollinger Band (3 standard deviations from the 20-day SMA) as traders overreact to some news item, then form a closed one-hour candle between the 1st and 2nd BBs. You place a limit order at the closing price for that candle with a stop at the swing low, then wait for the price to cross the 20 SMA. Sell half there, set the stop for the remainder at break-even, and target the 2nd BB for profit.
I would love to find out from the guys if they backtest and if so, how.
