Bollinger Band Strategy

Bollinger Bands Indicator Strategy

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

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

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

The example of Bollinger Bands indicator is illustrated below.

How to Use the 3 Bollinger Bands in Gold Trading: Upper Band, Lower Band & Middle Band in Gold Explained

Bollinger Band Indicator - How to Trade with Bollinger Band Strategy

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

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

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

Study More Tutorials & Courses:

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Bollinger Band Strategy

Bollinger Bands Indicator Strategy