Bollinger Bands Indicator.

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What Bollinger Bands  indicators and how do they work?


Bollinger band indicator is a technical indicator which is uesd in share market to estimate the market price. Bollinger Bands try to tell us the volatility in the market. if you apply this indicator on a chart, it looks like this, it has three bands, upper band, middle band and lower band. 

I know you are super excited to know more about Bollinger bands but before that," hello friends, myself Vikas your friend". and today's blog is about Bollinger bands.


Bollinger Band is considered a very important indicator in technical analysis in stock market and also in currency market. Now you may be wondering, what it is about the indicator that makes it so special. In Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Thats why the distance of the bands is basis on standard deviation, they adjust to volatility swings in the underlying price. 

Bollinger bands help determine whether prices are high or low on a relative basis. They are used in pairs, both upper and lower bands and in conjunction with a moving average. Further, the pair of bands is not intended to be used on its own. Use the pair to confirm signals given with other indicators.

How exactly do Bollinger Bands indicators work?


  • When the bands tighten during a period of low volatility, it raises the likelihood of a sharp price move in either direction. This may begin a trending move. Watch out for a false move in opposite direction which reverses before the proper trend begins.
  • When the bands separate by an unusual large amount, volatility increases and any existing trend may be ending. 
  • Prices have a tendency to bounce within the bands' envelope, touching one band then moving to the other band. You can use these swings to help identify potential profit targets. For example, if a price bounces off the lower band and then crosses above the moving average, the upper band then becomes the profit target. 
  • Price can exceed or hug a band envelope for prolonged periods during strong trends. On divergence with a momentum oscillator, you may want to do additional research to determine if taking additional profits is appropriate for you. 
  • A strong trend continuation can be expected when the price moves out of the bands. However, if prices move immediately back inside the band, then the suggested strength is negated

Are you also looking for the answer to the following question?


1. What do Bollinger Bands tell you?


Ans: Bollinger Bands, a technical indicator developed by John Bollinger, are used to measure a market's volatility and identify “overbought” or “oversold” conditions. Basically, this little tool tells us whether the market is quiet or whether the market is LOUD!

2. Is Bollinger Band effective?


The narrow bands are just closer to the price and thus likely to be touched. Bollinger bands aren't a perfect indicator; they are a tool. They don't produce reliable information all the time, and it's up to the trader to apply band settings that work most of the time for the asset being traded.

3. When should you use Bollinger Bands?


Bollinger Bands are a trading tool used to determine entry and exit points for a trade. The bands are often used to determine overbought and oversold conditions. Using only the bands to trade is a risky strategy since the indicator focuses on price and volatility, while ignoring a lot of other relevant information.

4. Which indicator works best with Bollinger Bands?


Best indicator to use with Bollinger Bands

The best combination of technical indicators is the RSI – a momentum indicator with Bollinger Bands – a trend-following indicator.

5. How do you use Bollinger Bands for day trading?


To do this, traders look at two lines: the middle and the upper one during an uptrend and the middle and the lower one during a downtrend. The idea is that during an uptrend, the price will move with the Bollinger Bands. A bearish signal emerges when the price moves below the middle line of the bands.

MORE IMPORTANT LINK:

  • Bollinger Bands strategy.
  • Bollinger Bands formula.
  • Bollinger Bands TradingView.
  • Bollinger Bands Investopedia.
  • Bollinger Bands crypto.

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