That approach-Rational Analysis-led to the establishment of Bollinger Bands and ensured. Bollinger's spot in investment analysis history. Now, in Bollinger on. The three Methods of using Bollinger Bands presented in "Bollinger On Bollinger done so rigorously--than anyone with the possible exception of John Hill of. *FREE* shipping on qualifying offers. John Bollinger is a giant in today's trading community. His Bollinger Bands sharpen the sensitivity of fixed indicators.
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[John a. Bollinger] Bollinger on Bollinger Bands - Ebook download as PDF File . pdf) or read book online. [John a. Bollinger] Bollinger on Bollinger Bands. John Bollinger - Bollinger On Bollinger mtn-i.info - FOREX MMCIS. Pages · · MB · 1, In the s, market newcomer John Bollinger. I think we all can agree that Bollinger Bands is a great indicator john measuring market bollinger. But how do we apply this indicator to trading and bollinger are.
Bollinger Bands answer a question: Are prices high or low on a relative basis? By definition price is high at the upper band and price is low at the lower band.
That bit of information is incredibly valuable. It is even more powerful if combined with other tools such as other indicators for confirmation. Stock market internals remain strong despite the reduced momentum and choppy character of the trading action. Divergences appear and then are over run, which is what a bull market does. Our favorite Bollinger On Bollinger Bands. John Bollinger developed Bollinger Bands in the early s and since their introduction 30 years ago they have become one of the most widely used technical indicators worldwide.
Learn how to use Bollinger Bands from the man who developed them. John Bollinger teaches you the basics of Bollinger Bands so you can use the effectively. Bollinger on Bollinger Bands: This will require a ton of patience to identify the setup since you need the second bottom to breach the bands to generate a powerful download signal. Strategy 2 Reversals - calling all of my risk takers. This approach is fantastic when you get it right because the reversal will pour money into your account.
However, get things wrong, and the pain can often leave you paralyzed from taking any action. You must be quick on your toes and willing to cut a loser without blinking. Strategy 3 Riding the Bands - this is for all my home run hitters out there.
That sounds easy, doesn't it? Well, I have tried systems that have low win percentages, and I have failed every time. This is because I am a sore loser. Therefore, I can't handle being wrong that infrequently. So, if you want to take less action and can seriously handle being wrong eight out of ten times, this system will be perfect for you.
Strategy 4 The Squeeze - this for me is the best setup for the traders that want the profit potential of riding the bands but can take quick money as things go in your favor. You can take one of two approaches with the squeeze strategy. For the riskier traders, you can jump in before the break and capture all of the gains.
More conservative traders can wait for the break and then look for a pullback setup in the direction of the primary trend. Strategy 5 Playing the Moving Average - this strategy is for all of the pullback traders. You are looking for stocks that are trending strongly and then react back to the period moving average. This setup works lovely when day trading the Nikkei and usually develops a little after forty-five minutes into the session.
Strategy 6 Trading the Range - I think I have already praised this one enough.
So, if you need thrills, this strategy will put you to sleep. You will likely want to focus on 2, 3, or 4.
Don't worry; I'm not about to go on a history lesson on cryptocurrencies with details of where David Chaum went to college. I want to center this piece of the article about how you can use bands to trade bitcoin. I was reading an article on Forbes, and it highlighted six volatile swings of bitcoin starting from November through March So, I wanted to do my research, and I looked at the most recent price swings of Bitcoin in the Tradingsim platform.
These price swings are breathtaking! Let's dig deeper into this price action by looking at the charts. During this period, Bitcoin ran from a low of 12, to a high of 16, Let's unpack this a little further. Do you realize that these gains were largely made over three days' worth of trading? I am getting a little older now and hopefully a little wiser, and that kind of money that fast, I have learned is almost impossible for me to grasp.
The psychological warfare of the highs and the lows become unmanageable. So, it got me thinking, would applying bands to a chart of bitcoin futures have helped with making the right trade? Bitcoin with Bollinger Bands I indicated on the chart where bitcoin closed outside of the bands as a possible turning point for both the rally and the selloff.
But let's be honest here, this is a minute chart of highly volatile security. You must honestly ask yourself will you have the discipline to make split-second decisions to time this trade, just right? As you can see, the minute chart is busy, so let's take things up to the daily level. It's not that the bands are doing anything wrong or not working.
Bitcoin is just illustrating the harsh reality when trading volatile cryptocurrencies that there is no room for error. I do not trade bitcoin, but after looking at the most recent price swing using bands a couple of things come to mind: Honor your stops.
I know sometimes we talk ourselves into "things will work out," but with volatile securities, you are essentially gambling. Only invest money you are willing to lose. Losing should never be your goal, but what I mean is that you shouldn't risk your home or life savings trading cryptocurrencies.
Short with caution. Cryptocurrencies can go on massive runs in a short period, so you need to make sure you again honor those stops and have enough cash on hand to avoid margin calls. In the previous section, we talked about staying away from changing the settings. Well, if you think about it, your entire reasoning for changing the settings in the first place is in hopes of identifying how a security is likely to move based on its volatility.
A much easier way of doing this is to use the Bollinger Bands width. In short, the BB width indicator measures the spread of the bands to the moving average to gauge the volatility of a stock. Why is this important to you? Well, now you have an actual reading of the volatility of a security, you can then look back over months or years to see if there are any repeatable patterns of how price reacts when it hits extremes.
Still, don't believe me? Look at the below screenshot using both the Bollinger Bands and Bollinger Bandwidth. The other point of note is that on each prior test, the high of the indicator made a new high, which implied the volatility was expanding after each quiet period. As a trader, you need to separate the idea of a low reading with the Bollinger Bands width indicator with the decrease in price.
If you had just looked at the bands, it would be nearly impossible to know that a pending move was coming. You would have no way of knowing that. This is just another example of why it's important to pair Bollinger Bands with other indicators and not use it as a standalone tool. This is always fun. Can an indicator somehow provide you clues of a major price swing? With the bull market outstaying it's welcome, volatility dropped to a multi-year low. Stop Looking for a Quick Fix. I want to dig into the E-Mini because the rule of thumb is that the smart money will move the futures market which in turn drives the cash market.
It is probably a little hard to see the explosion in volatility, so let's zoom in on the chart. Who Knew A Top was In? Looking at the chart of the E-mini futures, the peak candle was completely inside of the bands. Other than the fact the E-mini was riding the bands for months, how would you have known there was a big break coming? Now that I have built up tremendous anticipation let's see if there is a way to identify an edge.
Remember in Chapter 4, the Bollinger Bandwidth can give an early indication of a pending move as volatility increases. Volatility Breakout In the above example, the volatility of the E-Mini had two breakouts prior to price peaking.
If that wasn't enough to convince you, then the second break above the 8-month swing high of the Bollinger Bandwidth was your second sign. After these early indications, the price went on to make a sharp move lower and the Bollinger Band width value spiked. Applying Bollinger Bands to a Volatility Indicator The inspiration for this section is from the movie Teenage Mutant Ninja Turtles, where Michelangelo gets super excited about a slice of pizza and compares it to a funny video of a cat playing chopsticks with chopsticks.
The point is, it's so out there we have to try it out to see if it works.
VIXY Chart Does anything jump out that would lead you to believe an expanse in volatility is likely to occur? Look hard and resist the urge to scan a few inches down the page for the answer. Let me tell you when you are trading in real-time, the last thing you want to do is come late to a party. More times than not, you will be the one left on cleanup after everyone else has had their fun.
During this time, the VIXY respected the middle band. There was one period in late November when the candlesticks slightly jumped over the middle line, but the candles were red and immediately rolled over. However, in late January, you can see the candlesticks not only closed above the middle line but also started to print green candles. Now, one could argue that this wasn't enough information to make a trading decision.