BOLLINGER BAND
Bollinger band is one of the key Technical indicator. which signifies financial market price fluctuation , while market is high fluctuation the bollinger band will elaborate as well as bollinger band will shrink while being low volatility. it was created by John Bollinger in mathematical calculation basis. bollinger band is look like stripe upper band value is + standard deviation . lower band is - standard deviation. and the center line 20 DMA .
how to trade with bollinger
when price go beyond above bollinger band that means, security price is moving very strongly but price once again come below the bollinger band, we may expect further correction in security. the same thing happen in opposite direction of down side. when stock falling down sometime it brake down the bollinger band then enter in to the bollinger band again, that means stock is going to rebound from the lower level. this kind of trend changes will give small return or moderate return to Traders.probably it depends on chart time frame. weekly chart signals gives high return at the same time hourly charts gives small profit or moderate profits.
COMBINE WITH OTHER INDICATOR
bollinger band is not solo criteria. traders, should combine with other technical indicators and oscillators. RSI and ADX are better indicator to do combine with bollinger band. suppose, RSI indicate over bought signal in chart, at the same time if bollinger band upper band indicate sell signal that could be strong signal to mak short position in higher level.
ADX signify the securities trend strength and weakness. the bollinger band while give strong sell in the down trend, if ADX show strong trend, at this point traders can find the trading opportunity.
more likely, bollinger band more helpful for day traders than other trading method. but it takes litter more time to give solid result. so, day traders need more patient to enter the trading .
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