Bollinger Band Strategy

• How Bollinger Band Works
• Bollinger Band Volatility Analysis
• Bollinger Bands Bulge and Squeeze
• Bollinger Bands Price Action in Trends
• Bollinger Bands Price Action in Ranging Market
• Bollinger Bands & Trend Reversals
• Bollinger Bands Strategy Summary

Bollinger Band 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 and the price action will move within these 3 bollinger bands.

Bollinger Band indicator forms upper and lower bands around a moving average. 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.

Bollinger Band Indicator - How to Trade with Bollinger Band Strategy Method

Because standard deviation is a measure of price volatility and 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 bollinger bands widen. Low price volatility means the standard deviation is lower and the bollinger bands contract.

Bollinger Band 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 trading market.
• Periods of high volatility - extended trends, trending markets.
• Support and resistance levels of the price.
• Buy and Sell points of the price.