Bollinger bands Indicator Forex

Bollinger Bands are indicators used in Forex analysis were initially developed by John Bollinger during the 1980s. Bollinger Bands allow investors to know whether a price of one currency is high or low. The upper band is the criterion for high prices while the lower band is for low prices.
Bollinger bands Indicator Forex
Bollinger Bands use the measure of standard deviation, which is used to calculate the price differential on the "real price". Bollinger Bands expand and contract as the current price pattern flow figures expands or contracts to closed figures.

Many investors use them primarily to determine overbought levels and oversold, selling when price touches the upper Bollinger band and buying when it hits the lower Bollinger Band. Trendless markets, this technique works well, as prices travel between two bands like balls bouncing off two walls.

Bollinger Bands Limits

Simply touch the prices NOT MEAN bands that are a signal to initiate a position. The price usually can walk around the ends of the bands and get away. In these markets, investors who continually try to "sell at the top" or "buying at the bottom" face an intense series of "stop-outs" (output loss) or worse, with a floating loss increasing as prices move farther and farther from the original entry.

Maybe a smarter way to use Bollinger Bands is to use them to assess trends. To understand why Bollinger bands may be a good tool for this task we first need to ask how.

Mainly, the Bollinger Bands measure the deviation. This is the reason why they can be very useful in diagnosing trends. By generating two sets of Bollinger bands - a group using the parameter "1 standard deviation" and the other using the typical configuration of "2 standard deviations" we can look at the prices of a whole new way.
Deviation of the Bollinger Bands

Whenever the price moves between the upper Bollinger bands +1 SD and +2 SD away from the mean, the trend is up, therefore, we can define the channel as the "buy zone".
Conversely, if the price moves within the Bollinger Bands -1 SD and -2 SD, it is in the "sales area".



Finally, if the price band wanders between +1 SD and -1 SD band, you are essentially in a neutral state and we can say is "no man's land."



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