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Bollinger Band Trading Indicator Strategy

Bollinger Band works and is treated like a way to guess the volatility. The Bollinger Bands indicator shows where the price is on the chart.

Bollinger Bands consist of three lines: a middle band (moving average), an upper band, and a lower band. Price action typically fluctuates within these bands.

Bollinger Band forms upper & lower bands around a moving average. The default MA for bollinger bands technical indicator is the 20-SMA. Bollinger Band use the concept of standard deviation to form their upper & lower Bands.

The example of Bollinger Bands indicator is displayed and shown below.

Bollinger Bands Indicator Strategy - Index Bollinger Bands Strategy

Trading Strategy for Stock Indices Using the Bollinger Band Indicator - How to Trade with Bollinger Bands

Since standard deviation is a measure of Index price volatility & the volatility of the market is always changing, Index bollinger bands are continuously altering their width. Greater price volatility results in higher standard deviation and the more the Bollinger band expand. When the Index price volatility is low, the standard deviation is also low & the bollinger bands ​‍​‌‍​‍‌​‍​‌‍​‍‌shrink.

The Bollinger Band forex indicator uses price action to give a lot of info about how an index price moves. The price details from the bollinger bands indicator are:

  • Periods of low volatility - consolidation period of the market.
  • Periods of high market volatility - extended trends, trending Index markets.
  • Support and resistance levels of price.
  • Buy and Sell points of price.


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