Developed by John Bollinger, Bollinger Bands® are volatility bands placed above and below a moving average. In this lesson we outline the 3rd rule of the Double Bollinger Bands trading strategy. First in order to use Scalping Bollinger Bands Strategy you need to setup your charts to include the Bollinger Bands (20, 0, 2), Stochastic Oscillator (5, 3, 3) and Moving Average (200 EMA).
When you see that the bands are pretty narrow (squeeze the bands), it is a sign that the market is currently in consolidation. When the price goes out of the bands the trend has ended and therefore the trade is closed. We discussed the Bollinger squeeze strategy which teaches traders how to trade the breakout of the price action from the Bollinger squeeze situation.
The inventor of this fantastic tool of analysis is the American John Bollinger (1950), technical analyst, author and successful independent trader. You can apply the strategy in any timeframe, as long as they are all relative to your overall trading plan. When the volatility of a given currency pair is low, the two bands begin to compress together.
Another helpful use for the Bollinger Band tool is to help you stay with a trending market. Bollinger bands are a very powerful technical indicator created by John Bollinger. The 80 period simply shows where the Standard Bollinger Band would be on a 4 hour chart.
The volatility in the market determines the interval between the upper Bollinger band and the lower Bollinger band. If the price is in downtrend and continually hitting the lower band (and not the upper band), when the price hits the upper band it could signal that a reversal has commenced.
Bollinger band had to squeeze in to this narrow ATR band to qualify for a valid signal. The 20-day simple moving average (C) that serves as the baseline for the Bollinger Bands is in the center of this zone. However, if the trader wants to use extended upper and lower band settings, the standard deviation of the upper and lower bands can be adjusted.
As you can see Bollinger Bands are much more versatile, and although bands can be used to identify relative highs and lows, simply buying the lower band and selling the higher band is not a good way to trade unless chart reading is used to identify sideways conditions.
Bollinger bands can be used on any financial markets, which include stocks, commodities, Forex, futures, options, and bonds. Professional traders use the ADX indicator as a classics filter in the Bollinger band trading strategy. After setting your Bollinger Bands ® to 2.5 standard deviations, you will see that price reaches the outer bands less often.
When you see that the bands are pretty narrow (squeeze the bands), it is a sign that the market is currently in consolidation. When the price goes out of the bands the trend has ended and therefore the trade is closed. We discussed the Bollinger squeeze strategy which teaches traders how to trade the breakout of the price action from the Bollinger squeeze situation.
The inventor of this fantastic tool of analysis is the American John Bollinger (1950), technical analyst, author and successful independent trader. You can apply the strategy in any timeframe, as long as they are all relative to your overall trading plan. When the volatility of a given currency pair is low, the two bands begin to compress together.
Another helpful use for the Bollinger Band tool is to help you stay with a trending market. Bollinger bands are a very powerful technical indicator created by John Bollinger. The 80 period simply shows where the Standard Bollinger Band would be on a 4 hour chart.
The volatility in the market determines the interval between the upper Bollinger band and the lower Bollinger band. If the price is in downtrend and continually hitting the lower band (and not the upper band), when the price hits the upper band it could signal that a reversal has commenced.
Bollinger band had to squeeze in to this narrow ATR band to qualify for a valid signal. The 20-day simple moving average (C) that serves as the baseline for the Bollinger Bands is in the center of this zone. However, if the trader wants to use extended upper and lower band settings, the standard deviation of the upper and lower bands can be adjusted.
As you can see Bollinger Bands are much more versatile, and although bands can be used to identify relative highs and lows, simply buying the lower band and selling the higher band is not a good way to trade unless chart reading is used to identify sideways conditions.
Bollinger bands can be used on any financial markets, which include stocks, commodities, Forex, futures, options, and bonds. Professional traders use the ADX indicator as a classics filter in the Bollinger band trading strategy. After setting your Bollinger Bands ® to 2.5 standard deviations, you will see that price reaches the outer bands less often.