Bollinger Band Indicator

Bollinger Bands are intervals drawn on equity instruments price chart at standard deviation levels above and below the corresponding moving average. This produces an effect of having the bands widen during periods of price higher volatility and contract during less volatile periods. Bollinger Bands indicate the relative supply and demand for equity instruments. If ###3### price moves close to the top of the interval then it indicates that there is strong demand for the asset, alternatively if equity instruments hugs the bottom of the trading range then it indicates that there is oversupply of the asset.Investors can use prediction functions to forecast historical stock prices and determine the direction of financial instruments such as stocks, funds, or ETFs's future trends based on various well-known forecasting models. However, exclusively looking at the historical price movement is usually misleading. Macroaxis recommends to always use this module together with analysis of historical fundamentals such as revenue growth or operating cash flow patterns. Check out Investing Opportunities.

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Bollinger Bands are intervals drawn on equity instruments price chart at standard deviation levels above and below the corresponding moving average. This produces an effect of having the bands widen during periods of price higher volatility and contract during less volatile periods. Bollinger Bands indicate the relative supply and demand for equity instruments. If ###3### price moves close to the top of the interval then it indicates that there is strong demand for the asset, alternatively if equity instruments hugs the bottom of the trading range then it indicates that there is oversupply of the asset.
This indicator was developed by John Bollinger, CFA, an American author and well known financial analyst. Since the Bollinger Bands will nearly always be combined with other indicators when forming a trading system the number of periods used in the evaluation of the standard deviation and moving average of ###3### is very important. Macroaxis uses 15 as a moving average period and 2 for standard deviation. Learn more about Bollinger Bands on bollingerbands.com

Bollinger Band In A Nutshell

When using the Bollinger Band it would be safe to say that adding a momentum indicator could certainly help to sharpen your predictions about the market. For example, if you are using a Stochastic and it is above 80 while the chart is nearing the top of the Bollinger Band, you can have a decent opinion that the market may be becoming over bought. Same can be said for the reverse if the Stochastic is below 20 and the chart is nearing the bottom Bollinger Band.

Taking a look at this charting tool, it allows the trader to see when a stock is in the upper part of its trading range or the lower. The Bollinger Band was created by John Bollinger, and it uses the simple moving average, and plots two standard deviations away from the average. Many traders and investors use the Bollinger Band to determine if a stock or other trading product is becoming over bought and over sold. Using standard deviation, we can assume that there is an above 90% chance that a given data point stays within two standard deviations.

Closer Look at Bollinger Band

As with any charting tool, they are never 100% and should be tested on a demo account before being used. With the Bollinger Band tool, many of the charting platforms will let you change the parameters of the tool to fit your investing and trading style. Another way to use it is with fundamental data, as that can give you an indication of where price may want to go. If the price of a stock is expensive fundamentally, and you see that price is nearing the top of the Bollinger Band, then that could indicate a potential selling opportunity. Either way you decide to use the tool, this has been used by many and continues to be used today. Again, test it on a demo account before transitioning over to a live account to ensure you fully understand how it works.

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Check out Investing Opportunities. Note that the Investor Education information on this page should be used as a complementary analysis to other Investor Education statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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When running Investor Education price analysis, check to measure Investor Education market volatility, profitability, liquidity, solvency, efficiency, growth potential, financial leverage, and other vital indicators. We have many different tools that can be utilized to determine how healthy Investor Education is operating at the current time. Most of Investor Education value examination focuses on studying past and present price action to predict the probability of Investor Education future price movements. You can analyze the entity against its peers and financial market as a whole to determine factors that move Investor Education price. Additionally, you may evaluate how the addition of Investor Education to your portfolios can decrease your overall portfolio volatility.
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