Now, many a trader uses Bollinger bands in a variety of ways, each seeking their way to vast fortunes. For the chartists amongst us, a Bollinger band on a chart adds perspective and context to bands movements that otherwise may look quite random. What are Bollinger Bands? Within the secrets of the bands, several secrets can be revealed. Spotting the runaway trend About area between the upper and lower bands set at two standard deviations contain When price reaches the extreme outskirts of the channel it may be tempting to assume that price will retreat back inside, letting you get on board a reversal trade.
The future may forge out its own new territory. Very strong trends can run like a freight train above the channel or below the channel. These can be some of the best trends because they run up or down bollinger almost no time for pullbacks. Learn to recognize bollinger freight train bands and capitalize.
Gauging momentum Have you noticed that when price really takes off, the outer Bollinger Band on the opposite side secrets the secrets direction can move away from the trending price? Or will you hold on and wait for the trend to resume? Banging on opposite extremes Some financial products go from one outer Bollinger band to the other and then back again.
Where this occurs, it makes sense to trade a return inside the Bollinger bands or to assume support or resistance may hold. Spotting a reliable trend Strong and stable trends tend to stay on one side of the middle line, pulling the central moving average in the trend direction. If we put on another Bollinger band at 1 standard deviation, while keeping the 2 deviations Bollinger band, we can see how tidily the trend falls in the outer channel between 1 and 2 standard deviations.
Trading systems often suit one or more of the four market states, bands usually not all of them. The market states are trending volatile, trending quiet, ranging volatile and ranging quiet. The outer bands are wide apart. The outer bands are increasing their distance between them. The bands are narrow. The outer bands are contracting their distance between them. The middle Bollinger band slopes towards the trend direction.
Price tends to stay on one side of the Bollinger band or trades outside of it in a particularly strong trend.
The middle Bollinger band is horizontal or close to it. Price travels repeatedly from one outer Bollinger band to the opposite and vice versa. Putting it all together we can make an assessment of the current market secrets and compare it with the conditions that our trading system s perform best.
We want to have a higher frequency of trading in conditions that our trading system s suit and a lower frequency in poorly suited conditions. Bollinger Bands For Profit Bollinger bands make up a helpful part of a traders toolkit, giving clues about the market bollinger where it may about heading next. Five Ways To Improve Your Trading Now. Each trading day she provides traders "Forex Ready - Exceptional Preparation About Forex Traders" to save you time and money.
Sign up for "10 Powerful Lessons For Forex Trading Success" free! Rachel comes from a successful career as a Chartered Accountant to the level bands Chief Financial Officer. She believes trading is a business and core business principles can help all traders' succeed. RachelHunter February 06, Hi Rachel, Very informative!!! Pls put some charts also, would b very helpful Visitor - The Sparrow: Wow, great lesson, it would seem that the bb is the only indicator one might need to trade successfully.
It has bands, direction, volatility,momentum. I use Bollinger bands to help judge when a market is overextended. Super that you liked about article. Have you noticed how the slope of the channel that the Bollinger Bands create can make a difference when trading a reversal.
If the middle line moving average is heavily sloped in a particular direction, then as the price reverses towards it when trading against the trend direction, the middle line is coming towards price as time goes by during the trade, reducing the potential reward-to-risk. This phenomenon doesn't occur with a flat middle line. Food for thought to hopefully help you further. I've never got my bollinger around Bollinger bands before this article.
But now I'm inspired to investigate how they can help me with price action. I'm glad the article has helped you. Sign-In to Comment Name: You will also secrets a FREE subscription to the E-Newsletters from Bollinger. RachelHunter Member Since More About by RachelHunter.
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