Bollinger Band Strategies

Bollinger Band Indicator Strategy

Bollinger Band indicator acts as a measure of volatility. Bollinger Bands indicator is a price overlay trading indicator.

Bollinger Bands indicator consists of three lines or bands: the middle band (moving average), an upper band a lower band. These 3 bands will enclose the price & the price action will move within these 3 bollinger bands.

Bollinger Bands indicator forms upper & lower bands around a moving average MA. Default moving average for bollinger bands indicator is the 20-SMA. Bollinger Bands indicator use the concept of standard deviations to form their upper and lower Bands.

The example of Bollinger Bands indicator is illustrated below.

How Do I Trade with Bollinger Band Strategy?

Bollinger Bands Indicator - How to Trade with Bollinger Band Strategy

Because standard deviation is a measure of price volatility and volatility of the market is dynamic, the bollinger bands keep adjusting their width. Higher price volatility means higher standard deviation & the more the bollinger bands widen. Low price volatility means the standard deviation is lower and the bollinger bands contract.

Bollinger Band fore indicator use price action to give a large amount of price action movement information. The price information given by the this bollinger bands trading indicator includes:

Periods of low volatility- consolidation phase of the market.
Periods of high volatility - extended trends, trending markets.
Support and resistance zones of the market price.
Buy & Sell points of the price.

Get More Courses:

Trade Forex Trading

Bollinger Band Strategies

Bollinger Band Indicator Strategy