Bollinger Bands is one of the most popular market indicators followed by most trades for their online transaction and market predictions, amongst other indicators like MACD, RSI, moving average, etc. When trading in the stock market, one needs to take care of a couple of things and this is exactly where lies the importance of these indicators. Various indicators have been developed from time to time for making trading easy for the common men.
Bollinger Bands developed by John Bollinger is a well tried and followed indicator. Bollinger bands do not use any number to indicate the market changes. Rather, Bollinger Bands uses charts to show the ups and downs of the market. Basically, Bollinger Bands measure the market’s volatility.
Basics of Bollinger bands
Bollinger bands are three lines (bands); one being the middle base, while the other two being the standard deviations up and down, that widen or compress with the market changes.
When the price of a stock or market as a whole is quite the bands used in the chart contract and vice versa. Thus when the price changes either go up or down, the bands expand accordingly indicating the market’s movement too.
Using Bollinger bands
While calculating the market conditions using the bands one needs to be aware of the three bands, namely :
- Upper Band i.e. Middle band + 2 standard deviations
- Middle Band i.e. 20-period moving average ((or any other standard period of time)
- Lower Band i.e. Middle band – 2 standard deviations.
The middle band is basically a base for both the upper and lower. It is a 20-day simple moving average while the other bands are two Standard Deviations away from the center line.
By looking at these bands, one can easily predict as to when will the stock price head in the near future. Also, an idea of the lowest margins and the highest margins can be understood.
Introducing Triple Bollinger bands
The Triple Bollinger Bands is a compact indicator system where one can get all the three bands to shows you 3 Bollinger Bands indicator at once. One can set the deviation of each band individually to suit his or her personal needs and ease.
It is extremely convenient due to the fact that one does not need to check all three bands separately. A mere look of the single system will help get the entire information. It is less time consuming and easy to use, great for beginners.
Strategies of Triple Bollinger bands
All strategies remain same, just in a way more squeezed manner.
- Just like in Bollinger band if he previous close breaks above the upper band of the indicator then long position must be taken and vice versa.
- Adjusting the high ans lows according to your stock is advisable as it makes it easier to follow.
- While following a channel of constrained volatility , Bollinger squeeze must be taken care of here too.
Thus it is seen that popularity of Triple Bollinger bands is increasing day by day and that resulted in it making it possible to be installed on a limitless demo and live accounts.