vivek04

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
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Reversal

In conjunction with other indicators you can identify potential reversal points.
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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.
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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.
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[FONT=Times New Roman][SIZE=3]Best Regards[/SIZE][/FONT]
[FONT=Times New Roman][SIZE=3]Anand,[/SIZE][/FONT]
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samb

Paijaan, khudaa daa waasta aye, yaa tay formatting sikh lavvo yaa saadaay uttay rehem karo...

either way... so what are Bollinger Bands? they're rubbish... as is charting and technical analysis.

using charting/technical analysis to invest money is like going to a witchdoctor to treat a medical condition that should be treated by a real doctor.

reminds me of what Buffett said about technical analysis and why he gave up on it. he said that he realized that technical analysis was rubbish when he looked at a chart and it said something to him. and then he flipped it 90 degrees and it still said the same thing to him. he said he realized then that technical analysis was not for him. anyone who thinks logically and intuitively will come to the same conclusion.

it's unfortunate that there is so much disinformation prevalent in the field of finance that is used to mislead and milk the general public. the govt would never allow an electronics technician to build bridges across the country - that is the job of a civil engineer. similarly, you can't just cook up a miracle drug in your basement and start selling it. it needs to go to the FDA and be approved.

and yet there are no next to no professional standards in the finance industry. it is very unfortunate.