Bollinger Bands are a technical indicator created by John Bollinger , which appear directly on a price chart (called an overlay"). Subsequently, when the Stochastic breaks above the 20 level, a long position can be entered, with a potential move towards the middle Bollinger Band, which is considered to be the first target. In reality , the stock could just be starting it's glorious move to the heavens, but I am unable to mentally handle the move because all i could think about was the stock needed to come back inside of the bands.
One major advantage of using these bands is that they are so effective and strong in locating new trends as they emerge. Generally, Middle band is made up of 20 day moving average while upper and lower band are at 2 standard deviations of the middle band. We showed how this is done in our article on the Extended Bollinger Band strategy.
Combined with an oscillator it will give you a good way to enter trends, or could be used as a counter-trend scalping strategy (less reliable tho). A trading strategy requires entry points, exit points, and risk management, which weren't discussed in this article.
If price is below the Bollinger Band, you will only trade short when the price touches the top of the Bollinger Band. When you see that the bands are side apart, it is a sign that the market is currently in the breakout phase. The indicator is called Band-Width and the sole purpose of this indicator is to subtract the lower band value from the upper band.
This built in powerful tool allows traders to examine the effectiveness of their automatic Forex trading strategies. The initial stop loss is placed behind the band with a deviation of 1 (inside Bolinger band). My first time heard this strategy was posted by nick name Kang Gun in , he is Indonesian posted a lot about this, and I read his postings a lot back in 2009 ago.
Basically with an oversold condition, you want to use another tool in conjunction with bollinger bands to analyze the currency market. In addition to using the Bollinger Bands with the default 20 period Simple Moving Average and the 2 Standard Deviations, I recommend you add a 200 period Simple Moving Average indicator.
The price hit the Bollinger band, the RSI (when the price touches the bottom band) needs to be in between 50 and 30. If it is not here and let's just say it was at the 80 mark, then that would not be something you would be interested in trading. A double top that happens here will have high probability to reverse an uptrend into a downtrend.
Actually it is necessary to analyze the correlation with the RSI and you might get different information, understanding why we have this style of trading known as walking" on the bands. Is it possible to use the DBB Standard deviation 1 for BB breakout with candlestick patterns, because I've seen some setups form correctly, and it seems nowadays on many forex daily charts, standard deviation 2 is hard for the market to reach.
False signals can occur, but the positive signals are http://www.kzncomsafety.gov.za consistent enough to give a forex trader an edge". Overbought market is spotted when the price moves closer to the upper band while oversold market is identified when the price moves closer to the lower band.
One major advantage of using these bands is that they are so effective and strong in locating new trends as they emerge. Generally, Middle band is made up of 20 day moving average while upper and lower band are at 2 standard deviations of the middle band. We showed how this is done in our article on the Extended Bollinger Band strategy.
Combined with an oscillator it will give you a good way to enter trends, or could be used as a counter-trend scalping strategy (less reliable tho). A trading strategy requires entry points, exit points, and risk management, which weren't discussed in this article.
If price is below the Bollinger Band, you will only trade short when the price touches the top of the Bollinger Band. When you see that the bands are side apart, it is a sign that the market is currently in the breakout phase. The indicator is called Band-Width and the sole purpose of this indicator is to subtract the lower band value from the upper band.
This built in powerful tool allows traders to examine the effectiveness of their automatic Forex trading strategies. The initial stop loss is placed behind the band with a deviation of 1 (inside Bolinger band). My first time heard this strategy was posted by nick name Kang Gun in , he is Indonesian posted a lot about this, and I read his postings a lot back in 2009 ago.
Basically with an oversold condition, you want to use another tool in conjunction with bollinger bands to analyze the currency market. In addition to using the Bollinger Bands with the default 20 period Simple Moving Average and the 2 Standard Deviations, I recommend you add a 200 period Simple Moving Average indicator.
The price hit the Bollinger band, the RSI (when the price touches the bottom band) needs to be in between 50 and 30. If it is not here and let's just say it was at the 80 mark, then that would not be something you would be interested in trading. A double top that happens here will have high probability to reverse an uptrend into a downtrend.
Actually it is necessary to analyze the correlation with the RSI and you might get different information, understanding why we have this style of trading known as walking" on the bands. Is it possible to use the DBB Standard deviation 1 for BB breakout with candlestick patterns, because I've seen some setups form correctly, and it seems nowadays on many forex daily charts, standard deviation 2 is hard for the market to reach.
False signals can occur, but the positive signals are http://www.kzncomsafety.gov.za consistent enough to give a forex trader an edge". Overbought market is spotted when the price moves closer to the upper band while oversold market is identified when the price moves closer to the lower band.