{"id":9125,"date":"2011-08-31T00:01:41","date_gmt":"2011-08-31T04:01:41","guid":{"rendered":"http:\/\/club.ino.com\/trading\/?p=9125"},"modified":"2021-08-04T14:01:17","modified_gmt":"2021-08-04T18:01:17","slug":"advanced-technical-indicators-bollinger-bands","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2011\/08\/advanced-technical-indicators-bollinger-bands\/","title":{"rendered":"Advanced Technical Indicators - Bollinger Bands"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" src=\"\/img\/sites\/ino\/email\/2466.jpg\" alt=\"\" width=\"200\" height=\"150\" \/>If you follow our blog, then you are definitely familiar with trader    Larry Levin, President of Trading Advantage LLC. We have gotten such a    great response from some of his past posts that he has agreed to share    one more of his favorite trading tips as a special treat to our  viewers.   Determining the direction of the market can be tricky and  just plain   confusing at times, but Larry\u2019s expert opinion keeps it  simple. If you   like this article, <a href=\"http:\/\/www.ino.com\/specials\/secretsoftraders\/framingemailonly.html\" target=\"_blank\" rel=\"noopener\">Larry\u2019s also agreed to give you free access to  his favorite technique.<\/a><\/p>\n<p>Let's take another look at a more advanced technical tool - Bollinger Bands. These were developed by John Bollinger in the 1980s. In simple terms, they use a simple moving average and standard deviations to give a different perspective on potential highs and lows.<!--more--><\/p>\n<p>&nbsp;<\/p>\n<p><strong>Bollinger Bands have a middle band and two outer bands. <\/strong><\/p>\n<p>The middle band shown on this indicator is a moving average, usually a simple moving average (see Tip #29 for more on those) although some traders do use the exponential moving averages. The standard deviation calculations for the outside bands can be calculated like this example:<\/p>\n<p>* Middle Band = 20-day simple moving average (SMA)<\/p>\n<p>* Upper Band = 20-day SMA + (20-day standard deviation of price x 2)<\/p>\n<p>* Lower Band = 20-day SMA - (20-day standard deviation of price x 2)<\/p>\n<p><strong>The actual values used may depend on user preference. Use and interpretation may also vary. <\/strong><\/p>\n<p>This technical tool is a way some traders try to define and observe potential patterns. I don't claim to be an expert on these, but there are some common basics that analysts agree on. Volatility is the name of the game for the upper and lower band. Since they are based on standard deviations from the middle band they move closer to the middle when volatility contracts, and further out when volatility expands. Based on this level of volatility, the relationship between those lines and prices can be used to signal potential market conditions. Some analysts might see an overbought market where prices touch the upper band. Conversely, an oversold market might exist when prices are edging towards the lower band.<\/p>\n<p><a href=\"http:\/\/club.ino.com\/trading\/wp-content\/uploads\/2011\/08\/Levin-1.png\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-9126\" title=\"Levin 1\" src=\"\/\/club.ino.com\/trading\/wp-content\/uploads\/2011\/08\/Levin-1.png\" alt=\"\" width=\"624\" height=\"479\" srcset=\"https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2011\/08\/Levin-1.png 624w, https:\/\/www.ino.com\/blog\/wp-content\/uploads\/2011\/08\/Levin-1-300x230.png 300w\" sizes=\"(max-width: 624px) 100vw, 624px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p>Past performance is not necessarily indicative of future results. Chart courtesy of Gecko Software.<\/p>\n<p><strong>Other subtle patterns can be seen with Bollinger Bands on a chart.<\/strong><\/p>\n<p>The way the prices interact with the bands can lead to different kinds of patterns that technical analysts might interpret for trade designs. They have names like W-bottom or M-top or walking the bands. If you like playing with these statistical measures, you might enjoy reading more about them. Generally speaking, the visual cues regarding volatility are the main feature for this kind of chart overlay. They can also be used in conjunction with other analysis or observations as a way of complementing other signals or patterns. Play with Bollinger Bands and see how they might work with your trading tools to confirm or sharpen your market observations.<\/p>\n<p><a href=\"http:\/\/www.ino.com\/specials\/secretsoftraders\/framingemailonly.html\" target=\"_blank\" rel=\"noopener\">Click here to see one of Larry\u2019s top trading secrets<\/a>!<\/p>\n<p>Best Trades to you,<\/p>\n<p>Larry Levin<br \/>\nFounder &amp; President- Trading Advantage<br \/>\n<span \n                data-original-string=\"XDEH6XJ7CGm33VrZzZ2OM3uWcuNxeOQIeaVaLn8Rfwo=\"\n                class=\"apbct-email-encoder\"\n                title=\"This contact has been encoded by Anti-Spam by CleanTalk. Click to decode. To finish the decoding make sure that JavaScript is enabled in your browser.\"><br \/>\n        <span class=\"apbct-ee-blur-group\"><br \/>\n            <span class=\"apbct-ee-blur_email-text\">la***@tr**************.com<\/span><br \/>\n            <span class=\"apbct-ee-static-blur\"><br \/>\n                <span class=\"apbct-ee-blur apbct-ee-blur_rectangle-init\"><\/span><br \/>\n                <span class=\"apbct-ee-blur apbct-ee-blur_rectangle-soft\"><\/span><br \/>\n                <span class=\"apbct-ee-blur apbct-ee-blur_rectangle-hard\"><\/span><br \/>\n            <\/span><br \/>\n            <span class=\"apbct-ee-animate-blur\"><br \/>\n                <span class=\"apbct-ee-blur apbct-ee-blur_rectangle-init apbct-ee-blur_animate-init\"><\/span><br \/>\n                <span class=\"apbct-ee-blur apbct-ee-blur_rectangle-soft apbct-ee-blur_animate-soft \"><\/span><br \/>\n                <span class=\"apbct-ee-blur apbct-ee-blur_rectangle-hard apbct-ee-blur_animate-hard\"><\/span><br \/>\n            <\/span><br \/>\n        <\/span><br \/>\n<\/span><\/p>\n<p>Disclaimer: Trading in futures and options involves a substantial    degree  of a risk of loss and is not suitable for all investors. Past     performance is not necessarily indicative of future results.<\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>If you follow our blog, then you are definitely familiar with trader Larry Levin, President of Trading Advantage LLC. We have gotten such a great response from some of his past posts that he has agreed to share one more of his favorite trading tips as a special treat to our viewers. Determining the direction [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[1278,349,2913,4019,3579],"class_list":["post-9125","post","type-post","status-publish","format-standard","hentry","category-general","tag-bollinger-bands","tag-guest-blogger","tag-larry-levin","tag-simple-moving-averages","tag-trading-advantage"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Advanced Technical Indicators - Bollinger Bands - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2014\/10\/advanced-technical-indicators-bollinger-bands-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Advanced Technical Indicators - Bollinger Bands - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"If you follow our blog, then you are definitely familiar with trader Larry Levin, President of Trading Advantage LLC. 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