Bollinger Bands - Anyone Here Use Them?

[FXexpert]

Hey everyone,

Just a quick question, does anyone here use the bollinger bands as part of their analysis? If so, have they been of help?

Thanks in advance for the advice!

[miskec]

They offer some information about the market and i do use them but not that seriously to follow just them, they are more of a double check.

Bollinger Bands are a tool of technical analysis which was invented by John Bollinger in the 1980s. Having evolved from the concept of trading bands, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period time. Basically, this tool provides a relative definition of high and low. By definition prices are high at the upper band and low at the lower band. This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions. When the market is calm, the Bollinger Band lines get closer together and when the market was changing Bollinger Band line expand.

Bollinger Bands.

[jimb12345]

this is a great indicator to use. I would use other indicators all with bollinger bands. It will definitely help your trading.

[FXexpert]

Thanks, I'm beginning to think they're best to use with other indicators.

[fxalgotrader]

I wouldn't advise using Bollinger Bands unless you're trading long term mean reversion strategies. If you trade bands using short time frames they tend to produce a lot of false signals. The 'squeeze' is a polular strategy when using Bands but more often than not price action will break out of a constricted band, shoot through the upper or lower band and then retrace all the way.

Another band based play is selling when P/A hits the upper band and vice versa when it hits the lower band. This approach will murder you if you get a situation where P/A 'walks the bands' - this normally happens when P/A comes out of consolidation and begins to trend.

Bands work much better in range bound markets or on much higher timeframes like Weekly and Monthly charts where mean reversion is arguably more applicable.

If you would like any further information please email me@ info@fxalgotrader.com or visit my site - www.fxalgotrader.com

[Pinalli]

The basic interpretation of Bollinger Bands is that, the prices tend to stay within the upper and lower bands. The Bollinger Bands have unique characteristic that the spacing between the bands varies based on the volatility of the currency prices. During high volatility periods, the bands widen to become more forgiving. Similarly during periods of low volatility, the bands narrow to contain currency prices. The bands are draw with two standard deviations above and below a SMA. They indicate a "sell" when above the moving average (or close to the upper band) and a "buy" when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.

[ExtremeTrader]

Bollinger are a great indicator, one of the few which actually give leading signals and not just show you the past. There are several ways to use it, with the main one being using the lower and upper bands as Support and Resistance. Wait for the middle band to become flat (to indicate that the trend is not strong) and trade off the upper and lower bands. This is a profitable strategy.

Another nice strategy is the Squeeze... Read about it - its interesting.

[Pinalli]

Interesting FXexpert! i am sure now you must be having good knowledge about it. Well which currency you trade most and which is your favorite indicator?

[FXexpert]

I always trade the EUR/USD & I use a variety of indicators.

[Pinalli]

Originally Posted by FXexpert

I always trade the EUR/USD & I use a variety of indicators.

YEa, Its an interesting pair and quite easy ofcourse

A revised piece of data that showed a slower-than-expected contraction in the US economy in the second quarter coupled with a fall in weekly jobless claims caused the Dollar to fall hard versus the yen on Thursday. The overall tone was one of caution, on very light trading though and the Dollar suffered broad losses against most other majors as well.