Bollinger on bollinger bands

     

Bollinger Bands were created by John Bollinger in the 1980s and are one of the most popular and widely used technical analysis indicators in the markets today.

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Not only can Bollinger Bands be used in a large number of markets from Forex, Cryptocurrencies and stocks, they can also be used on all time frames.

Bollinger Bands are most often used as a trend following indicator as well as gauging if a market is overbought or oversold. 

In this post we go through how you can set them up on your charts and three easy strategies you can use to trade with them.

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Table of Contents


Bollinger Bands SettingsThree Bollinger Bands Strategies

Bollinger Bands Settings

Bollinger Bands are created by three ‘bands’; the upper, middle and lower band.

The common standard setting is to have the middle band set to a 20 period simple moving average.

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The upper band is created by taking the middle band and adding twice the standard deviation.

The lower band is created by taking the middle band minus twice the standard deviation.

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Lastly

Whilst Bollinger bands can be excellent for gauging the strength of the market, the trend and if a market is overbought or oversold, they should not be used alone.

Other technical analysis and indicators will help you confirm your trade entries such as support and resistance, trendlines, moving averages and the MACD.

When making trades with Bollinger Bands you always want to take into account the overall market conditions. Using ‘tags’ of the upper and lower bands for entries may work well in ranging markets, but during strong trends it could see you take a lot of losses.

Lastly, always test new indicators, analysis techniques and strategies on a demo trading account to make sure you are profitable with them before ever risking real money.


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