Bollinger bands effectiveness

Bollinger Bands may be used in any type of market, except where the liquidity is low.

Bollinger Bands in Forex and Stock Trading [With Detailed Pictures]

Their greatest utility is probably when used for short term swing trading in highly liquid markets. Bollinger Bands are a specific type of a general indicator class that seeks to profit from the way trends and trading ranges oscillate above and below a moving average or price level respectively.

Using Bollinger Band® "Bands" To Gauge Trends

The particular strength of Bollinger Bands is the way they expand and contract reflecting the relative volatility of the price data. A general observation is that strong directional moves tend to follow contraction of the bands and so of the volatility.

A similar observation has long been used in the triple moving average system with the concept of clustering. Bollinger Bands also seem to allow some guide as to how far a move will go in that it seems to go from one band to the opposite band.

They are not a magic indicator, but a useful addition to the trader's toolbox.

They require some practice. Like all technical analysis tools, if they are not comfortable for you, look for another tool that does the same job. Home About Colin Biography Investment Returns Buy Books Building Wealth in the Stock Market Creating Real Wealth Think Like the Great Investors Uncommon Sense Free Resources Ask Colin Book Reviews Data and Other Files Educational Articles Glossary Hear Colin Speak Michael Kemp Articles Recommended Reading Building Wealth Resources Charts and Data Investment Plan Changes Mkt.

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