Even though there are so many types of specialized indicators available on-demand, brokers still use classic indicators as a tool to analyze price movements. One of the indicators under consideration is the Bollinger Bands. This index has an easy-to-read interface for all traders. The executing signal is also relatively accurate, especially if supported by other acknowledgments. But do you know? Bollinger Bands were created by a US technician named John Bollinger.
Who is John Bollinger?
John Bollinger was born in Montpelier, Vermont, the USA on May 27, 1950. Since purchasing his first microcomputer in 1977, John Bollinger has become more involved in forums and computer-specific analysis.
Computer technology has allowed Bollinger to develop Group Power, a rating system that shows trends in bright sectors of diligence. This system continues to grow from time to time until, eventually, the initial structure allows for further sophisticated Internet analysis.
John Bollinger career.
In 1980, John Bollinger became an independent trader. At that time, he joined the Financial News Network, where he served as the main critic of requests seven times from 1984 to 1990. John was responsible for specialized televised analysis. After the financial news network was acquired by NBC, Bollinger helped move to CNBC while continuing to provide commentary on-demand regularly.
Shortly thereafter, John Bollinger created the investment company Bollinger Capital Management. There he worked as a chief fiscal critic and also as an inquiry specialist. John Bollinger was the first fiscal critic to hold both positions simultaneously. He is also the author of Southern California Market Judges. It is still known that Bollinger is the leader of Bollinger Capital Management.
In addition, the creator of the Bollinger Bands index was also a member of the Marketers Association (MTA) 7 times, from 1988 to 1997. He has also been registered with the International Federation of Technical Judges (IFTA) 5 times (from 1998 to 1997). 2003 and Member of the Market Technicians Association Educational Foundation (MTAEF) from 2008 to 2012.
On rational analysis.
Since early morning, Bollinger has always focused on the relationship between specialized and conversational analysis. To overcome the difference between the two types of analysis, he also created a new approach which he called rational analysis. John Bollinger was the first to use the term in the late 1980s. According to him, rational analysis refers to the factors that combine specialized analysis with conversational analysis. John really managed to create a visual representation of his idea.
At the AIMR conference in 2004, John made a donation called "Combining Technical and Fundamental Analysis" in which he dives deeper into the concept. At that time, fiscal judges were divided into several groups, which differed in their individuality and focus. However, the Rational Analysis expressed by Bollinger managed to bring these differences together.
The analogy used by Bollinger for rational analysis relies on many tools. He believes that to get stylish results, the critic must use stylish tools, wherever they come from. The same can be applied to the analysis of fiscal requests. Not only relying on conversational or specialized analysis, sometimes the critic must be able to combine everything in order to get more accurate results.
A predecessor of Bollinger Bands.
Although John Bollinger was a successful critic with many improvements, he is best known for the Bollinger Bands Index created in the early 1980s. At that time, the John Bollinger match showed that the price volatility in the query was dynamic and not static, as the query participants had hitherto believed. He was also inspired by a similar index, created by Wilfrid LeDoux in 1960, in which the annual highs and lows of the Dow Jones were associated with inducing signals.
When first introduced to the public at a Financial News Network event, Bollinger Bands did not yet have a name. Until an expert suggested that the index only refers to Bollinger Bands. Due to its inflexibility, this index is often used in colorful queries ranging from stocks, forex, and commodities to futures.
Bollinger Bands can also be used on a daily or yearly basis. This index is identical to its three main lines: the upper band, the middle band, and the lower band. When displayed on a chart, Bollinger Bands have a shape resembling a channel around a price chart. This index can move in the direction of the price and show changes in the volatility of widening and narrowing channels.
The upper and lower bands are determined by adding and subtracting standard deviation SMA values. While the standard deviation measures the volatility of how far the price can move from the actual value. Bollinger Bands can be formulated using the following formula.
Upper band = SMA (n) k * standard deviation (n)
Lower band = SMA(n)-k * standard deviation(n)
n = dimension period (omission 2)
This index can usually be installed on popular trading platforms including Mobius Trader 7 (MT7), Metatrader 4 (MT4), Metatrader 5 (MT5), or TradingView. The deviation parameter used is SMA 20 and standard deviation 2. When the price touches the upper band and closes below this line, the request can be said to be in an overbought condition. On the other hand, if the price touches the lower band but still closes above the lower band, the request is said to be oversold.
22 John Bollinger Rules for Using Bollinger Bands
John Bollinger admits that one of his most important ways is to watch other dealers get creative with his pointers. Based on stoner questions and 30 times experience with Bollinger Bands, John formulated the following 22 rules.
The Bollinger Bands Index can show the highest and lowest points where the price is considered high when it hits the upper band and is considered low when it hits the lower band.
This companion can be used to compare price action and index signals to get advice on how to enter a position.
Good indicators can be derived from incitement, volume, query sentiment, Intermarket data, and more.
However, pointers should not be linked to each other if more than 1 index is used. For example, the run index should not be used in conjunction with other run indexes but should be used to round the volume index.
Bollinger Bands can be used to describe Price Action patterns like M, W patterns, instigation shifts, and so on.
Signals that appear when the price breaks the upper or lower band should not be interpreted as entry or exit signals without fresh evidence.
When the request is in a trend, the price may move up the upper band or lower the lower band.
The presence of a candle that closes outside the band can be interpreted as a forward signal, not a reversal.
The deviation parameter for calculating the moving average is 20, as is the standard deviation of 2, which sets the range. The parameters applied in colorful requests or strategies can be adapted depending on the requirements.
The middle band isn't a stylish benchmark for crossovers, but it can be used to spot mid-term trends.
To get harmonious results, you need to increase the number of standard deviations if you increase the period of the middle band. On the other hand, a decreased mean band parameter should also be followed by a decreasing standard deviation.
Traditional Bollinger Bands are based on a simple moving average. This is because the SMA is used in the calculation of the standard deviation.
EMA-based Bollinger Bands can eliminate the threat of unanticipated band range changes when prices fluctuate significantly. It should be noted that exponential anchoring is used not only for the middle band but also when calculating its standard deviation.
Don't make statistical hypotheses based on the standard deviation reflected in the band's movement. Because, in principle, the distribution of prices cannot be predicted directly, and the sample of prices that are usually used in working with Bollinger Bands is not significant enough to represent price data as a whole.
Bollinger Bands is used to determine the position of the price relative to the Bollinger bands. Its position in the band is calculated using an adapted Stochastic formula.
Bollinger Bands has many advantages, but the main point is related to divergences, price patterns, and setting up a trading system using Bollinger Bands.
The index can be ordered with. For this you will need Bollinger bands with a period of 50 combined with the named index, also calculate b of the index.
As the name suggests, BandWidth indicates how wide the bandwidth is. Band range is measured using the middle band. The unused parameter used for BandWidth is four times the measure of variation.
BandWidth has many uses, but its primary purpose is to detect narrowing Bollinger Bands and trend changes.
Bollinger Bands can be used for a wide variety of queries, including forex, indicators, commodities, futures, options, and bonds.
Bollinger Bands can be used for all time frames, be it 5 minutes, 1 hour, 1 day, 1 week, and so on. The key is that each candle should have enough changes to give a strong picture of price confirmation.
Bollinger Bands cannot give signals all the time. However, this index can identify potentially profitable setups.
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