Bollinger Bands is a technical analysis tool that helps traders spot the upcoming trends and reversals. This tool is a unique indicator and is made from the composition of three lines or you can call them bands via which you can easily spot the best entry and exit points.
What are Bollinger Bands?
History
Bollinger Bands is a financial instrument that helps traders analyse the security price and spot the upcoming trends and reversals. The indicator was developed by John Bollinger in the 1980’s.
John Bollinger is an American author, financial analyst and contributor in the field of technical analysis.
He has won notable awards for his work such as the Technical Securities Analyst of Francisco Lifetime Award, Market Technicians Association Annual Award & more.
You can find his original work on the Bollinger Band Indicator in his book name Bollinger on Bollinger Bands. This book has been translated into 11 languages till now and has been one of the most sold ones in Amazon.
Indicator
Now, Talking about the Bollinger Bands indicator, this indicator is made from the composition of three bands i.e. upper band, lower band and middle band.
The middle band is a simple moving average while the upper and lower band are based on the calculation of the standard deviation of the price movements.
You can use these three bands to identify upcoming trends and reversals plus understand the market conditions. when the price continuously touches the upper band it signals an overbought condition and vice versa when the price continuously touches the lower band it signals an over-sold condition.
How to add Bollinger Bands on the Pocket Option
Bollinger Bands is a free-to-use indicator which means you can use the Indicator on the pocket option demo account.
In case, you don’t have a pocket option demo account yet use this link with the link you will land on the pocket option trading dashboard here you can start trading for free.
Now, In order to add the Bollinger Bands on pocket option click on the indicator button at the top of the page and search for the Bollinger Bands indicator name in the list.
Now, a popup will appear here you can make necessary amendments in the indicator and once you are done click apply.
How to trade with Bollinger Bands
As I said above, Bollinger Bands is made from the composition of three lines when the price touches the upper band it signals an overbought level which means you can expect an upcoming bearish trend and you can use this opportunity to place a sell trade.
Similarly, when the price touches the lower band it signals an oversold level which means you can expect an upcoming bullish trend and you can use this opportunity to place a buy trade.
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