Trade Stock Indices

Bollinger Band Trading Strategies

Bollinger Band Stock Indices Technical Indicator Strategy

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

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

The example of Bollinger Bands indicator is illustrated below.

How Do I Trade Indices with Bollinger Band Indices Strategy?

How Do I 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 fx indicator use price action to give a big amount of price action movement information. The price info given by the this bollinger bands trading indicator includes:

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

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