Bollinger Bands is an indicator of graphics or commonly referred to as technical indicators that were developed by John Bollinger. These indicators are used to measure market volatility happens. As a trader, Learn how to use Bollinger bands indicator is very necessary for us to do. This is because this indicator is very popular among professional traders.
Basically, a small tool that tells us whether the market is calm or whether the market will move quickly. Bollinger bands can be used to identify the presence of a quiet movement as well as a large enough movement. When the market is calm, the Bollinger bands are small enough to form a flat envelope. However, when Bollinger bands start narrowing, with – care, because a big movement will occur.
Learn how to use Bollinger bands indicator
Forgetting to learn and understand the characteristics of Bollinger bands indicator, try to look at the Graph chart below. When the price of quiet, upper and lower adjacent lines and straight. When the price moves up, bottom and top band outline expand.
The above-described aims to introduce the history of the Bollinger band and how to apply in the currency market. If explained too long winded about history, we certainly are going to get bored to read it. What counts now is how Bollinger bands that work help us to analyze the market and profit from trading using this indicator.
If you really want to learn more detail about calculations of Bollinger Bands and the other, then you can go to the website bollingerbands.com.
One thing you should know about Bollinger Bands is that prices tend to go back to the middle of the band. That’s the whole idea behind Bollinger bounce. By looking at the chart below:
When the price reaches the upper Bollinger band line, if we take a position sell, then we are right! As we have seen, the price of sitting back down towards the middle area band and was even able to bottom line band. And no doubt we will get a profit from such a situation.
What do we know about what is classic Bollinger Bounce? The reason this happens is because the bounce Bollinger bands act as support and resistance lines.
The larger the timeframe that we use, Bollinger bands tend to get stronger. Many traders have developed a system that thrives on the bounce and this strategy is best used when the market started to calm down and there is not a trend that’s going on.
Now let’s learn how to use Bollinger bands indicator when the market is trending.
Bollinger Squeeze is a situation when the band began to increasingly narrows, this usually means the breakout will URterjadi.dan can just identify the existence of a trend. If the candle closes above the upper band, the price will usually continue to rise. So did the opposite. If the candle closes below the lower band, then prices will usually continue to fall.
The Narrowing Bollinger Band
Look at the chart above, we see the line of the Bollinger bands are narrowed and the price was just starting to get out of the line-up of the band. Based on the situation, where are prices going?
Bollinger Band Squeeze Expands
If we said it will continue to go up, then we are right. This shows how the Bollinger Squeeze typically can be used.
This strategy is designed for those of us who want to know the price movement direction as early as possible. A situation like this doesn’t happen every day, but we might be able to see this situation several times a week if we look at the chart on the timeframe of 15 minutes.
There are many things that we can conclude after knowing and using the indicator of Bollinger bands as described above. If the more developed, there are a lot of other things we can do with Bollinger Bands, but these are the 2 most common strategy related to the scalping strategy and swing. It’s time to use this strategy in trading platform us before we move on to learn and get to know the next indicator.