Bollinger Bands Trading Strategy
For technical analysis there are many chart indicators are used by traders but Bollinger Bands are the most popular among them. The reason is that various trading markets that are related to shares and exchange businesses depend upon it. John Bollinger has made this masterpiece in 1980.
This tool is used to predict the fluctuation in prices for upcoming time-frames. Apart from this, it is not only widely used to restructure the levels of over-valued assets but also to observe any breakouts in the market.
Bollinger Bands use simple calculation
Bollinger Bands have only three lines. For the middle brand, simple moving average (SMA) is used for 20 days which is the most common calculation. Similarly, to calculate the upper band, the middle band is taken after the twice addition of the daily standard deviation in that amount. To calculate the lower band, the middle band is taken after deducting the daily standard deviation by two times.
Bollinger Bands gives full detail of the assets and stocks
Bollinger Bands is especially utilized to determine the oversold/overbought trends in the market. When the Bollinger Band shows the reduction of prices of certain assets then there are many chances that prices may rise or fall so much. On the contrary, when the prices of certain assets rise above the upper band, there might a trend of overbought or pullback conditions in the market.
The theory of mean reversion of the price is used for the indication of overbought/oversold bands. According to mean reversion theory, the prices of the assets fall back to the mean price if the original prices considerably turn from the average or mean.
Generate various bands for better vision
The tag of the upper Bollinger Band doesn’t always show selling signals. Likewise, the tag of the lower Bollinger Band is not always the indication of buying signals
The price often walks with the band. In these circumstances, those traders and investors who are very inclined to constantly selling the top and buying the bottom may face bad experiences and evenly considerable loss because nobody in the market can predict the fluctuation of the prices of assets at all.
An amazing tool for trend traders and investors
The best feature of the Bollinger Band is that they had given the rules and regulations about the bands completely. By following these rules, the investors and traders can easily use this technical and analyzing tool without any problem to gain substantial profit and avoid considerable loss in the business. By carefully observing the chart of Bollinger Band; the traders may conveniently predict the price variations of the buy zone. By this amazing tool, the traders and investors can stay longer than their expectations in the business.
Bollinger Bands also utilize squeeze strategy
Among other characteristics of the Bollinger Band is that a squeeze strategy can also be utilized. In a squeeze situation, the prices of the assets and stocks move aggressively and after that, it starts moving several ways in the market.
The time when the upper and the lower bands come closer, the investors and traders can easily ascertain the period when the prices of the stocks and assets are going to be favorable. When the period of consolidation is finished, the prices of the assets and stocks start going to different directions which might high or low.
Uses of Bollinger Bands Trading Strategy:
Currency pairs: All
EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD, NZDUSD, USDCAD,EURJPY, EURCHF, EURGBP, EURAUD, EURNZD, EURCAD,GBPJPY, GBPCHF, GBPAUD, GBPNZD, GBPCAD AUDCAD, AUDNZD, AUDJPY, CHFJPY, NZDJPY, CADJPY, CADCHF, NZDCHF
Trading Time: 24 Hours
Timeframe: Bollinger Bands Trading Strategy
Recommended broker: All trusted brokers
Remember, Before use Bollinger Bands Trading Strategy you can test on Demo account. When you will expert then you will use in Real account of trading.