Bollinger Bands signals

Bollinger Bands signals

Introduction


Bollinger Bands (Bollinger Bands) are very common as an indicator in Forex, and on other financial sites. As with most other technical analysis tools Bollinger was named in honor of its developer, John Bollinger (pictured), who suggested that the tool still in the distant 80's of last century.

John Bollinger suggested the construction of canals (envelope average) are not only averaged values, but also take into account the standard deviation, thus not missing from the analysis of the volatility parameter pair, who plays in his opinion, one of the key roles.

The structure of the Bollinger Bands signals


Bollinger Bands signals consist of three lines:

The mid band is a simple moving average. Period and the smoothing method which you can change the settings in the indicator.
band above the moving average = + N standard deviations
strip below the moving average =-N standard deviations

Bollinger Bands signals calculation formula
where:

N - integer parameter that can change the settings in the indicator, the default is 2, the field is called "rejection."

Standard deviation - the notion of mathematical showgirl, signaling a dispersion (distance) of the series of data on their average. The more data values ​​differs from the average value, the greater the standard deviation.

If we translate this into the language of Forex charts, we can conclude that the higher the volatility of the pair for a certain period of time, the higher the standard deviation, and therefore the further away from the central moving average to the upper and lower Bollinger Bands signals, considering I have quoted above formula.

Thus, if the trend observed at the site, and therefore quotes are very different from the average for the period of the bands widen, and vice versa, the quieter area, the closer to the center strip rolling. (Figure 1, I identified these areas in the blue box.)

Bollinger Bands signals

Most traders consider Bollinger Bands signals as support / resistance levels, and depending on the passage of these levels form a signal to buy or sell the trading instrument.

Price went over the top bar and back across its top down - a signal to sell
Price went for the lower band and cross it back from the bottom up - a signal to buy
Price is below (above) the middle zone, testing, and rebounds from a level signal to sell (buy) an asset.
Price is below (above), the middle band, and exceed the level of testing, the signal to buy (sell) an asset.


In Figure 2, I noted the optimal entry point on the indicator in the D1 pair GBP / USD for example.

Tips for using the indicator Bollinger Bands signals

1. Change the value of the indicator parameters. Above, we found that the indicator Bollinger Bands are directly dependent on the volatility of the pair. But as the Forex market every currency pair has its own degree of volatility, it is useful to find the best possible value for the number of standard deviations from the moving average. Rate this result may be the most appropriate and visually.

2. Like any other indicator Bollinger Bands signals should not be used as the sole instrument trading system. He, along with others, should form a combined signal, given the rules of the TS.

3. Observe the indicator on multiple time frames, making the priority at signals with a larger. ("The method of Elder's Triple Screen."

Bollinger Bands signals Conclusion

By studying the information on this indicator on the internet, I found that many traders use not only standard signals Bollinger Bands, but also some of his achievements, so this offer is subject to share experiences on the indicator Bollinger Bands signals.


other posts
- Sfx Tor Indicator Forex
- T3 Alpha Forex Indicator
- Vinini Const Tick Price Indicator
- Xit Fibs Pdf
- Ytg Ss Mq4