Where Should I Place a Stop Loss Order using Bollinger Bands Indicator?

How to Set a Stop Loss Order using Bollinger Bands Indicator

Bollinger Bands Indicator

Bollinger bands stock technical indicator use standard deviation as a measure of volatility. Since standard deviation indicator is a measure of volatility, bands are self adjusting which means they widen during the periods of higher volatility and contract during the periods of lower volatility.

Bollinger Band consist of 3 bands designed to encompass the majority of a instruments stock price action. The middle band is a basis for the intermediate term trend, typically it is 20 period simple moving average, which is also the base for upper and lower bands. The upper band's distance and lower band's distance from the middle band is determined by volatility of price.

Since these Bollinger bands are used to encompass the instrument stock trading price action, the bands can be used to set stop loss orders outside the areas of the bands.

How to Place a Stop Loss Order using Bollinger Bands Technical Indicator