The Bollinger Bands indicator is a commonly used technical analysis indicator that consists of three lines: the middle line, the upper band line, and the lower band line. The middle line is the moving flat**, the upper channel line is the moving flat** plus two standard deviations, and the lower channel line is the moving flat** minus two standard deviations.
The Bollinger Bands indicator can be used to determine trends and volatility. In a trend**, the stock price moves along the middle line. In volatility, the stock price goes back and forth between the upper and lower channel lines.
There are two operational strategies of the Bollinger Bands indicator:
1.Interval operation policy
In volatility**, the Bollinger Bands indicator can be used for range-bound operations. Here's how:
When the stock price falls below the lower band line, it can be **.
When the stock price touches the upper channel line, it can be sold.
2.Trend action strategy
In Trend, it is possible to perform trend operations using the Bollinger Bands indicator. Here's how:
When the stock price breaks through the upper band line, it can**.
When the stock price falls below the lower band line, it can be sold.
How the Bollinger Bands indicator works:
The principle of use of the Bollinger Bands indicator is based on the standard deviation in statistics. Standard deviation is a measure of how volatile data is. In the Bollinger Bands indicator, the upper and lower bands represent the maximum range of stock price fluctuations.
When the stock price falls below the lower band line, it means that the stock price has fluctuated beyond the normal range. At this time, there is a high probability that the stock price will appear**.
When the stock price breaks through the upper band line, it means that the stock price has fluctuated beyond the normal range. At this time, there is a good chance that the stock price will continue**.
Conclusion:
The Bollinger Bands indicator is a simple and easy-to-use technical analysis indicator. Mastering the use of the Bollinger Bands indicator can help investors succeed in **.
Additional Notes:
In practice, an enhanced version of the Bollinger Bands indicator can be used. The enhanced version of the Bollinger Bands indicator adds an arrow indicator to the original one. The arrow indicator can help investors determine if the stock price is about to break out of the channel.
When using the Bollinger Bands indicator, it is also necessary to conduct a comprehensive analysis in combination with other technical indicators. In this way, the accuracy of the operation can be improved.