Bollinger Bands Trading Strategies

Bollinger Bands Stock Index Indicator Strategy

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

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

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

The example of Bollinger Band indicator is illustrated and shown below.

How Do I Trade Indices with Bollinger Bands Stock Indices Trading Strategy?

How Do I Trade Indices with Bollinger Bands Strategy

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 bands widen. Low trading price volatility means the standard deviation is lower and the bollinger bands contract.

Bollinger Band fx indicator use price action to give a big amount of the price action movement information data. The price info given by the bollinger bands indicator includes:

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

More Topics and Guides:

Trade Stock Indices

Bollinger Bands Trading Strategies

Bollinger Bands Stock Index Indicator Strategy