Trading With Bollinger Bands
A 1-minute lesson from the MarketPro academy, one of 24 in trading strategies.
Bollinger Bands consist of a moving average with two bands plotted above and below it, spaced according to recent price volatility. As volatility increases, the bands widen; as it decreases, they contract.
Bollinger Bands consist of a moving average with two bands plotted above and below it, spaced according to recent price volatility. As volatility increases, the bands widen; as it decreases, they contract.
Common Applications
- Price touching or exceeding the upper band is sometimes read as a stretched or overbought condition
- Price touching or exceeding the lower band is sometimes read as a stretched or oversold condition
- A period of narrowing bands, often called a "squeeze," can indicate reduced volatility that sometimes precedes a larger move
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Lesson 7 of 24 in Trading strategies
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