The Bollinger Bands (1)

  

Bollinger Bands Usage review.

Bollinger Bands. Non-trend market, parellel bands. Short on the upper band, and long on the lower band.

Bollinger Bands. Up Trend market, Only long when price near or touch lower band. Or in a very strong trend, long on the moving average also ok.

Bollinger Bands. Down Trend market, Only short when price near or touch upper band. Or in a very strong trend, short on the moving average also ok.

Bollinger Bands. After squeeze, some break out will occur when upper bands rise and lower bands fall

Tips:

• This is forex, not a stock. But the tips should apply as well.
• Can setup 20,2 as parameters. Means using 20 ma and 2 standard deviation.
• Bollinger Bands evaluate stock volatility. If bands narrow, means low volitality. If bands wide, means high volitality.
• 1 deviation means 65% price within the bands, 2 means 95, and 3 means almost 99%.
• In a sideway market, Bollinger Bands can be a good hint to long or short stocks. That is to say if price near or touch lower band, long, if price near or touch upper band, short.
• If the bands are parellel, using the way above mentioned is even more effective.
• But in a trend market, must follow the trend. Means in a downtrend market, only sell when price near or touch upper band. Dont buy even the price near or touch or pierce the lower band, and vice versa.
• The low volatility means squeeze. This means that traders should be prepared for the future price move. Using the other very good indicator "Squeeze Momentum Indicator by LazyBear" can pick up a nice entry for trading.
• For option traders, low volatility is a nice time to sell options to collect premiums.