Jump to content

What Are Bollinger Bands?


mark04

Recommended Posts

What Are Bollinger Bands?

 

Bollinger bands are an integral part of just about every charting system We have ever seen but many traders are unfamiliar with how to use them. The bands are plotted at a standard deviation (statistical term for measuring volatility) around a moving average. Typically the standard deviation used is 2.

A simple moving average in the middle. Most charting software defaults to a 20 period moving average.

An upper band calculated around a simple moving average plus 2 standard deviations.

A lower band calculated around a simple moving average minus 2 standard deviations.

For our examples we will use the most common setting of a 20 period simple moving average. This will give us 3 bands, the middle band of a 20 period simple moving average and the upper and lower bands calculated around the middle band with standard deviation of 2. The closing price is most commonly used to calculate the moving average.

The Squeeze

The squeeze (tightening) is a period of low volatility and often happens before a big move. It can also help identify potential breakout areas

 

Reversal

In conjunction with other indicators you can identify potential reversal points.

 

Trending Following

Although Bollinger bands will not tell you when the trend has started if you combine it with certain indicators they will confirm the trend.

 

Our Use Of Bollinger Bands

As we mentioned earlier Bollinger bands are not really meant to be used as a signal generating indicator but in conjunction with another indictors can be very useful. We like to use Bollinger bands and RSI together to generate possible buy and sell signals or to confirm overbought or oversold areas. When the RSI reads below 30 and price is touching or pushing through the lower band then we know we are oversold and We will either consider buying the market or close existing short positions.

 

Best Regards

Mark,

Link to comment
Share on other sites

  • 3 weeks later...
  • 3 weeks later...
  • 2 months later...
  • 6 months later...
What Are Bollinger Bands?

 

Bollinger bands are an integral part of just about every charting system We have ever seen but many traders are unfamiliar with how to use them. The bands are plotted at a standard deviation (statistical term for measuring volatility) around a moving average. Typically the standard deviation used is 2.

A simple moving average in the middle. Most charting software defaults to a 20 period moving average.

An upper band calculated around a simple moving average plus 2 standard deviations.

A lower band calculated around a simple moving average minus 2 standard deviations.

For our examples we will use the most common setting of a 20 period simple moving average. This will give us 3 bands, the middle band of a 20 period simple moving average and the upper and lower bands calculated around the middle band with standard deviation of 2. The closing price is most commonly used to calculate the moving average.

The Squeeze

The squeeze (tightening) is a period of low volatility and often happens before a big move. It can also help identify potential breakout areas

 

Reversal

In conjunction with other indicators you can identify potential reversal points.

 

Trending Following

Although Bollinger bands will not tell you when the trend has started if you combine it with certain indicators they will confirm the trend.

 

Our Use Of Bollinger Bands

As we mentioned earlier Bollinger bands are not really meant to be used as a signal generating indicator but in conjunction with another indictors can be very useful. We like to use Bollinger bands and RSI together to generate possible buy and sell signals or to confirm overbought or oversold areas. When the RSI reads below 30 and price is touching or pushing through the lower band then we know we are oversold and We will either consider buying the market or close existing short positions.

 

Best Regards

Mark,

 

hi mark, could you share indi with template? i am interesting with your strategy

big appreciate for you could help me

 

thanks

thegatan

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

×
×
  • Create New...