Bollinger bands are one of the most popular indicators used in the online trading. First developed by John Bollinger in the 1980’s the bands gave strong signs of market momentum and entry and exit points. A trader can safely find entry points when market momentum will carry an asset in the same direction over a short period of time, many traders believe that everything you need to know to successfully execute a trade can be found within the Bollinger bands, including entry and exit points and stop loss levels. The bands automatically widen when volatility increases and narrow when volatility decreases. This dynamic nature of Bollinger Bands also means they can be used on different securities with the standard settings. For signals, Bollinger Bands can be used to identify M-Tops and W-Bottoms or to determine the strength of the trend.

According to Bollinger, the bands should contain 88-89% of price action, which makes a move outside the bands significant. Technically, prices are relatively high when above the upper band and relatively low when below the lower band. However, relatively high should not be regarded as bearish or as a sell signal.

Together we will add Bollinger bands to your charts on the TraderPro platform as we learn how to use them properly.

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