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The Bollinger Band Squeeze can also be a trading system but like every trading method, test your idea before putting money on the line. This is used in conjunction with the keltner channel and is called the squeeze. Whatever way you choose to use the bollinger bands as part of a swing trading strategy, ensure you test it and log a trade plan so you can stay on track.Īnother use of the bollinger bands is to measure price compression and a break from the consolidation. The mean reversion aspect is a more advanced bollinger strategy and is shown in the second trade example in the last chart.īollinger bands can keep you objective in your trading by offering you not only a place to consider a trade, but areas to consider taking profits as described above. You can use these as a mean reversion system or a continuation swing trading strategy. Your trading system may require price movement touching or exceeding the upper or lower bands before taking a trade
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This Bollinger Band Strategy Is Worth A Testīollinger bands can frame price and show you when there is an extreme move worth noting. This highlights that while technical indicators such as the bollinger band can aid you in trading, price action will always rule.
![bollinger bands default settings in advanced get bollinger bands default settings in advanced get](https://venturebeat.com/wp-content/uploads/2018/04/tempest-4000_20180328221420.jpg)
We need to see price moving above the middle line of the bollinger band.
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One main difference is the keltner channel uses average true range for the calculation. The bollinger bands are a technical indicator similar to the keltner channel as they are both bands and a measure of volatility. This often can set up some great trading opportunities. Any price movement that touches or exceeds the upper or lower band show a market that has increased volatility. The theory is that the settings of the top and lower bands (the standard deviation from the moving average) contain price action. Before you start changing the bollinger band settings looking for the best settings……I will tell you that there is no “best” setting and anybody trying to sell you the perfect setting (or a secret bank setting) is dishonest.