How to Use Bollinger Bands for Trading Success
What Are Bollinger Bands? Bollinger Bands are a volatility indicator that consists of a moving average with two “bands” plotted at standard deviations above and below it. These bands adjust based on price volatility.
–When prices touch the upper band: It indicates the stock may be overbought.
–When prices touch the lower band: It signals the stock may be oversold.
How to Trade Using Bollinger Bands Traders use Bollinger Bands to identify entry and exit points. When a stock price consistently touches the upper or lower band, it could be due for a reversal, creating a trading opportunity.
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