Bollinger Bands are a technical indicator that is useful to determine the movement of the price range, for all assets. At the moment the price outside of the normal range, this could be a harbinger to buy options.
Why do we need it?
• Determine the entry point.
How does it work?
Bollinger Bands have 3 lines on a graph, which can be narrowed or widened depending on market developments. When the market is quiet, Bollingerr Bands are narrowed, but when there's a spike in the price of abnormal, Bollinger Bands will widen.
The midline is yellow is a simple moving average with priode 20. Two other lines are the movement of the indicator.
Bollinger Bands Strategy
"Bollinger Bands" is a trading strategy which is aimed at setting a reversal of the trend and the market decline to as low as an average price.
A simple pattern:
1. apply Bollinger Bands indicator
2.Wait until the candle penetrated above/below the Bollinger bands.
• When candle closed above the Bollinger bands, the signal will show that prices would soon come down and go back to the average – buy the lower option.
• When candle closed under the Bollinger bands, the signal will show that the price will soon go up and back to average higher options
Although very simple, Bollinger Bands are very useful indicators. With practical experience and accurate analysis is crucial to using technical indicators. These skills that differentiate with novice and professional traders. Important things you should keep in mind that Bollinger Bands is not an instrument to be used for any purpose and is not 100% correct. You must be menggabugkannya with the other indicators in order to get more accurate results.
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