Bollinger Bands Trading Strategies

• How Bollinger Bands Works
• Bollinger Bands Market Volatility Analysis
• Bollinger Bands Bulge & Squeeze
• Bollinger Bands Price Action in Trends
• Bollinger Bands Price Action in Range
• Bollinger Bands & Trend Reversals
• Bollinger Bands Trading Strategy Summary

Bollinger Bands Stock Indices Technical Indicator Strategy

Bollinger Bands indicator acts as a measure of volatility. Bollinger Bands indicator is a price overlay indicator.

Bollinger Bands indicator consists of three lines or bands: the middle band (moving average), an upper band a lower band. These 3 bands will enclose the price & the price action will move within these 3 bollinger bands.

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

The example of Bollinger Bands indicator is shown below.

How to Trade Indices with Bollinger Band Strategy Method

Because standard deviation is a measure of price volatility and volatility of the market is dynamic, the indices trading bollinger bands keep adjusting their width. Higher trading price volatility means higher standard deviation and the more the bollinger bands widen. Low trading price volatility means the standard deviation is lower and the bollinger bands contract.

Bollinger Bands forex indicator use price action to give a large amount of price action movement information. The price information given by the this bollinger bands indicator includes:

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