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[miskec]

Bollinger Bands are a tool of technical analysis which was invented by John Bollinger in the 1980s. Having evolved from the concept of trading bands, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period time. Basically, this tool provides a relative definition of high and low. By definition prices are high at the upper band and low at the lower band. This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions. When the market is calm, the Bollinger Band lines get closer together and when the market was changing Bollinger Band line expand.

You can read rest of the article at Bollinger Bands.

[pinalli]

Hi there,

The basic interpretation of Bollinger Bands is that, the prices tend to stay within the upper and lower bands. The Bollinger Bands have unique characteristic that the spacing between the bands varies based on the volatility of the currency prices. During high volatility periods, the bands widen to become more forgiving. Similarly during periods of low volatility, the bands narrow to contain currency prices. The bands are draw with two standard deviations above and below a SMA. They indicate a "sell" when above the moving average (or close to the upper band) and a "buy" when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.

[jeff15]

Bollinger bands are actually indicators as to the volatility of a particular security. As a result, for trading purposes, one would want to look at the activity of trading within the bands in conjunction with another tool, such as the Relative Strength Indicator, to properly undertake investment decisions.

[miskec]

The strange this about B. Bands that even Bollinger himself doesnt like to use them (go figure).

[arfx2]

Originally Posted by miskec

The strange this about B. Bands that even Bollinger himself doesnt like to use them (go figure).

Can any body show a successful startegy based on signals of bollinger bands? I also don't blieve in them, Infact I don't like any derivative of MA because they are time lagging.

[pinalli]

Originally Posted by miskec

The strange this about B. Bands that even Bollinger himself doesnt like to use them (go figure).

funny.....

[ginx10k]

Originally Posted by arfx2

Can any body show a successful startegy based on signals of bollinger bands? I also don't believe in them, Infact I don't like any derivative of MA because they are time lagging.

Try to Use the Bollinger Bands combined with a Stochastic RSI. And Check A couple of practice trades, then tell me that you Don't believe in them. The signals are really Strong.

Strategy Overview:

When price reaches the Upperband, and Stochastic is crossing from above 80 back down, go Short.

Do the opposite for going LONG.

[popoola]

Can you post a chart? A picture paints a thousand words. Also dont forget that price can 'surf' the bands ie keep going up as the bands go up. Also I have seen situations when stochastics are going down but price is still going up

[ginx10k]

Originally Posted by popoola

. Also I have seen situations when stochastics are going down but price is still going up

That's called divergence. It rocks. I'll try to get some charts for you when I get some free time.

[MarioX]

Originally Posted by pinalli

funny.....

It's not funny. Funny is that people who know that still buy that BB is more of a marketing success than trading success. Very famous strategy/indicator but nothing more...one could say that it is 'famous for being fanous'.

[FXCode]

Nice article.
Bollinger Bands are a great indicator, one of the very few who are leading indicators.

[bobbhim]

One could use 2 AND 3 std deviations on same chart for "better"viewing.

[jeff15]

Good explanation miskec through the charts in your article.

[siis]

Originally Posted by bobbhim

One could use 2 AND 3 std deviations on same chart for "better"viewing.

Dear:

sorry, what's 2 or 3 std deviation (less 20 Days) ?

thanks ~

[miskec]

I think he ment derivation.