THE BOLLINGER BANDS

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tracting bands advise that the market is almost to trend: the bands premier focus into a narrow cervix, followed along a sharp price movement. The 1st breakout is constantly a disloyal move, preceding a strong trend in the opposite direction.
A move that starts at one band normally carries via to the other,[link widoczny dla zalogowanych], in a ranging mart.
A move appearance the band indicates that the trend is strong and likely to continue - unless price fast reverses.
A trend that hugs 1 band signals that the trend namely strong and probable to persist. Wait for divergence (when the price namely flat alternatively rising or falling, merely the MACD namely going in the opposite price will jump out at in the direction of the MACD) or a Momentum Indicator to signal the end of a trend.
I use the BB's for indication of when a breakout or collapse is forthcoming. When the outside bands obtain very alley, it manner the price is consolidating and is getting ready for a breakout, both up or down.
At this point,[link widoczny dla zalogowanych], it's perilous to have a position because you don't understand whether it's going to destroy up or down. When the bands get very narrow, it's about better to near out your antique positions, even at a wastage, until you discern a remove direction. If you don't absence to close out an age position at a detriment, at fewest hedge it. See more about hedging later in the Advanced Day Trade Forex course.
The BB's can't differentiate you which instruction the breakout will be, the Chaos Oscillator (MACD) and Momentum ambition do that, and I always commerce in the direction the Momentum and Chaos (MACD) are going.
Sometimes when using the slower timeframes, I use the outer BB's for targets for my limit sell price. If the bands are really broad later a big move, I use the middle band as my limit target price.
Bollinger Bands are charted to capture a crowd of price movement. When prices push further the upper or lower band, they are considered high (overbought) or cheap (oversold) on a respective basis.
More on Using Bollinger Bands:
First, the BB's tin be used as I said before, as price targets. If the bands are narrow, the price will be jumping up & down within the two outer bands. As mentioned before, this is not the best time to be putting on a trade, as the trading scope is also narrow, unless you can make a decent quick profit in a 1 or 5 minute diagram.
If the range isn't too narrow, you can ride it up and down and writing pips. I only try this in a 1 or 5 minute timeframe using the 5/9/18/50 EMA's. Don't do it if you can't make at least 5-10 pips up and down. The danger is in whipsaws.
Most of the time, unless the bands are too narrow, you can make trades by literally bouncing off the outer bands.
This is called "The Bollinger Bounce".
When placing a trade, just set your stop at the outer BB and your price target limit sell order where the other outer band is.
If your trade quickly reaches the limit price and always your indicators say that the price movement is just getting started & not threaten to quickly reverse on you, then you should first either clear your limit price & let the price escape, or, heave your limit price distinct 5-10 pips. Then heave your stop to either your entry point or elapse it, to lock in either breakeven or some profit in case the price suddenly reverses on you.
This is definitely what you ought do in a price breakout. If the price keeps going up in an extended breakout, you just reserve adjusting your stop upwards to latch in more profit (this is shrieked a trailing stop, extra later ashore this subject) and keep raising your restrict likewise.
A Super Advanced usage of using BB's is to use two sets of BB's, both with the medium band set at 18. Set one BB to a standard discrepancy of 3 and leave the additional standard discrepancy by 1. This gives you 6 short term support/resistance lines to go with. Your initial stop and target are the outer bands, and your internal bands are used for y

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