UTRADE-FX
05-03-2010, 04:54 PM
http://www.youtube.com/watch?v=lYzn_mEpTyg
Bollinger Bands Introduction
Developed by John Bollinger, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period of time. The indicator consists of three bands designed to encompass the majority of a security's price action.
1. A simple moving average in the middle
2. An upper band (SMA plus 2 standard deviations)
3. A lower band (SMA minus 2 standard deviations)
Standard deviation is a statistical unit of measure that provides a good assessment of a price plot's volatility. Using the standard deviation ensures that the bands will react quickly to price movements and reflect periods of high and low volatility. Sharp price increases (or decreases), and hence volatility, will lead to a widening of the bands.
USE:
The Bollinger bands give us strong support and resistance line working only In a range , an important not is that Bollinger bands should only be traded while the standard deviation line is trading in it inner peak and troughs , any brake out of the standard deviation line will indicate a trend and the Bollinger band will not work
In the example on the video you will see how effective it is to merge between the Bollinger band and the standard deviation
Standard Deviation (Volatility)
Standard deviation is a statistical term that provides a good indication of volatility. It measures how widely values (closing prices for instance) are dispersed from the average. Dispersion is the difference between the actual value (closing price) and the average value (mean closing price). The larger the difference between the closing prices and the average price, the higher the standard deviation will be and the higher the volatility. The closer the closing prices are to the average price, the lower the standard deviation and the lower the volatility.
This study is very useful to determine if we are in a rang or trend, this will enhance your readings in the Bollinger bands
How to use it? Just zoom in the chart try to draw a support and resistance line on the small peaks and troughs, you would notice that since the currency is trading with in the borders of the line that you drew it is range trading pattern and once it brakes out the market is entering into a trend trading pattern
FOR MORE INFORMATION ON THIS TOPIC PLEASE CONTACT MIKE TORRES
AT MIKETORRES@UTRADE-FX.COM
OR VISTIT OUR WEB SITE WWW.UTRADE-FX.COM
YOU CAN ALSO FOLLOW MIKE ON TWITTER
Bollinger Bands Introduction
Developed by John Bollinger, Bollinger Bands are an indicator that allows users to compare volatility and relative price levels over a period of time. The indicator consists of three bands designed to encompass the majority of a security's price action.
1. A simple moving average in the middle
2. An upper band (SMA plus 2 standard deviations)
3. A lower band (SMA minus 2 standard deviations)
Standard deviation is a statistical unit of measure that provides a good assessment of a price plot's volatility. Using the standard deviation ensures that the bands will react quickly to price movements and reflect periods of high and low volatility. Sharp price increases (or decreases), and hence volatility, will lead to a widening of the bands.
USE:
The Bollinger bands give us strong support and resistance line working only In a range , an important not is that Bollinger bands should only be traded while the standard deviation line is trading in it inner peak and troughs , any brake out of the standard deviation line will indicate a trend and the Bollinger band will not work
In the example on the video you will see how effective it is to merge between the Bollinger band and the standard deviation
Standard Deviation (Volatility)
Standard deviation is a statistical term that provides a good indication of volatility. It measures how widely values (closing prices for instance) are dispersed from the average. Dispersion is the difference between the actual value (closing price) and the average value (mean closing price). The larger the difference between the closing prices and the average price, the higher the standard deviation will be and the higher the volatility. The closer the closing prices are to the average price, the lower the standard deviation and the lower the volatility.
This study is very useful to determine if we are in a rang or trend, this will enhance your readings in the Bollinger bands
How to use it? Just zoom in the chart try to draw a support and resistance line on the small peaks and troughs, you would notice that since the currency is trading with in the borders of the line that you drew it is range trading pattern and once it brakes out the market is entering into a trend trading pattern
FOR MORE INFORMATION ON THIS TOPIC PLEASE CONTACT MIKE TORRES
AT MIKETORRES@UTRADE-FX.COM
OR VISTIT OUR WEB SITE WWW.UTRADE-FX.COM
YOU CAN ALSO FOLLOW MIKE ON TWITTER