15 Characteristics Of Bollinger Bands In Technical Charts

Characteristics Of Bollinger Bands In Technical Charts. Beautiful women watching Bollinger Bands in technical charts.

(14) Bollinger Bands Can Quickly Adapt To Changing Market Conditions

It is one of the most unbeatable characteristics of Bollinger Bands in technical charts. Bollinger Bands® are non-static indicators that can change their shape depending on recent price action.

They can expand & contract as the volatility of underlying security or bond increases & decreases. This will ultimately create a very accurate trending envelope. This behavior makes it a popular indicator amongst traders & investors.

Generally, price stays close to outer band (either upper band or lower band) during strong trend (either uptrend or downtrend).

If price pulls away from outer band as trend continues, it indicates fading momentum. However, repeated pushes towards the outer band without reaching it shows a lack of power.

A break of the moving average is the signal the end of a trend. On the other hand, various other standard indicators are usually lagging in this characteristic.

Thus, you can use Bollinger bands to read market & trend strength. It will help you to time entries during range-bound markets as well as to find potential market tops.

[Read Also: 20 Tricky Ways To Identify & Avoid Value Traps in Stocks]

(15) Bollinger Band Trading Strategy Differs From Trader To Trader

It is one of the most important guidelines of using Bollinger Bands in technical analysis. Bollinger Bands® trading strategy is not unique for all kinds of traders & investors.

It can differ from one trader to another & even for same trader at different times. It is always desirable for every trader to understand how to use Bollinger bands.

Ever trader should find his/her ideal entry/exit points of trade. This will in turn depend on concerned security or bond as well as risk levels of the investor or trader.

For example, if you are comfortable with buying near lower band then go for it. However, if you find more comfort while making short positions near upper band then it will be best strategy for you.

Generally, the price of underlying security or bond fluctuates between upper & lower band for 85% to 90%. Therefore, you are likely to make consistent profits as long as price range is not breached.

Image Source

Recommended Posts

More From GetUpWise

About Editing Staff

At GetUpWise, we are a team of professional writers from different areas of subjects. We are conducting thorough research on each & every topic from highly reputed sources before writing any piece of article. Once research is done, we try our best efforts to provide informative piece of articles in an easy to understand manner. It is something that is extremely essential to meet our goal while reaching & offcourse building a strong online community. We do update our articles from time to time in order to provide the most latest information quickly. Thus, our articles can be used as a “way to gain smartness”.

Leave a comment

Your email address will not be published.


More in Stocks & Mutual Funds
Factors To Consider When Analyzing Promoter’s Stake Change.
10 Factors To Consider When Analyzing Promoter’s Stake Change

Promoters can increase or decrease their stake anytime. These factors to consider when analyzing promoter’s stake change to get maximum...