xysoom
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| Posted: 14 July 2020 at 10:51 | IP Logged
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Learn how to use the Bollinger line to accurately
Bollinger Bands, the invention of John Bollinger, is used
to measure a markets volatility and identify
¡°overbought¡± or ¡°oversold¡± conditions. This little
tool tells us whether the market is quiet or loud. When
market is quiet, the bands contract and when market is
loud, the bands expend.To get more news about
Wi
kiFX, you can visit wikifx news official website.
¡¡¡¡It can be seen from picture that the Bollinger Bands
is a chart that is displayed over the price. When the
price is stable, the bands are close. When the price
moves up, the bands spread apart. The upper and lower
bands measure volatility, or the degree in the variation
of prices over time. The volatility bands automatically
adjust according to changing market conditions.
 01/637292136157585028/ART637292136157585028_291605.png-
wikifx_articlepic">
Most charting programs default to a 20-period, which is
fine for most traders, but you can experiment with
different moving average lengths after you get a little
experience applying Bollinger Bands.
¡¡¡¡The concept of standard deviation (SD) is just a
measure of how spread out numbers are. If the upper and
lower bands are 1 standard deviation, this means that
about 68% of price moves occurred recently are CONTAINED
within these bands. If the upper and lower bands are 2
standard deviations, this means that about 95% of price
moves occurred recently are CONTAINED within these bands.
¡¡¡¡As you can see, the higher the value of SD you use
for the bands, the more prices the bands ¡°capture¡±. You
can try out different standard deviations for the bands
once you become more familiar with how they work.
Honestly, you don¡®t need to know most of this stuff to
get started. We think it¡¯s more important that we show
you some ways you can apply the Bollinger Bands to your
trading.
¡¡¡¡If you said down, then you are correct! As you can
see, the price settled back down towards the middle area
of the bands.
What you just saw was a classic Bollinger Bounce. The
reason these bounces occur is because the Bollinger bands
act like dynamic support and resistance levels.
¡¡¡¡The longer the time frame you are in, the stronger
these bands tend to be. Many traders have developed
systems that thrive on these bounces and this strategy is
best used when the market is ranging and there is no
clear trend. You only want to trade this approach when
prices are trendless. So be mindful of the WIDTH of the
bands.
¡¡¡¡Avoid trading the Bollinger Bounce when the bands are
expanding, because this usually means the price is not
moving within a range but in a TREND! Instead, look for
these conditions when the bands are stable or even
contracting.
¡¡¡¡Bollinger Squeeze
¡¡¡¡The ¡°Bollinger Squeeze¡± is pretty self-explanatory.
When the bands squeeze together, it usually means that a
breakout is getting ready to happen. If the candles start
to break out above the TOP band, then the move will
usually continue to go UP. If the candles start to break
out below the BOTTOM band, then price will usually
continue to go DOWN.
¡¡¡¡Looking at the chart above, you can see the bands
squeezing together. The price has just started to break
out of the top band. Based on this information, where do
you think the price will go£¿
¡¡¡¡This is how a typical Bollinger Squeeze works. Setups
like these don¡®t occur every day, but you can probably
spot them a few times a week if you are looking at a 15-
minute chart. There are many other things you can do with
Bollinger Bands, but these are the two most common
strategies associated with them. Go ahead and add the
indicator to your charts and watch how prices move with
respect to the three bands. Once you¡¯ve got the hang of
it, try changing up some of the indicators parameters.
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Topic: Learn how to use the Bollinger line to ac
