Bollinger bands styrategy
Bollinger Bands were created by John Bollinger in the 80's, and they quickly became one of the most commonly used in technical analysis. Bollinger Bands consist of three groups - upper, middle band and bottom - which are used to price short-term extreme in Spotlight safety. The upper band represents overbought, while the lower band can show you when a stock is oversold. Most technicians Bollinger bands in conjunction with other analytical tools used to get a better picture of the current state of a market or security. (To learn more about how Bollinger Bands are designed to be seen, the basis of the Bollinger Bands.)
The strategy
Most technicians Bollinger bands in conjunction with other indicators to be used, but we wanted a look at a simple strategy that uses only the bands, making business decisions. It turns out that buying the case of the lower band of Bollinger is a way to place the benefits of oversold conditions. In general, once broken in the lower band is due to strong sales, refund the purchase price of shares is above the lower band and head towards the middle band. This is the exact scenario of this strategy aims to capitalize. The strategy calls for a close below the lower band, then the purchase as an immediate signal to the stock, use the next day.
Example 1: Intel Corp (INTC)
Below is an example of how this strategy works in ideal conditions.
Figure 1
Figure 1 shows that Intel broke the lower band of Bollinger and ends on 22, including December. This was a clear signal that the stock was in oversold territory.
Our strategy is simple Bollinger band requires a close below the lower band a buy now followed the next day. The next trading day was not until December 26 when the dealer would give their positions. This proved to be an excellent commercial. December 26th marks the last time Intel would trade below the lower band. Since then, Intel has increased throughout the upper Bollinger band. This is a prime example of what the search strategy.
While price movement is not important, this example serves to establish the conditions that the strategy aims to highlight from profit transfer agreements. (For related reading, see the benefit of Squeeze).
Example 2: New York Stock Exchange (NYX)
Another example of a successful test of this strategy is on the map of the New York Stock Exchange where he broke the lower band of Bollinger 12 Found in June 2006.
Figure 2
NYX was clearly in oversold territory. Following the strategy of technical traders would purchase orders for NYX June 13 to give. NYX closed below the lower band of Bollinger for the second day, which can be caused some concern among market participants, but which would have closed the last time below the lower band for the rest of the month.
This is the ideal scenario, the strategy seeks to capture. In Figure 2, the extreme selling pressure and marked over the Bollinger Bands adjust for this, June 12 to sell the most serious. Opening a position on June 13 may give traders the right before the turn.
Example 3: Yahoo Inc. (YHOO)
In another example, Yahoo broke the lower band at 20 December 2006. The strategy called for immediate purchase from the next trading day.
Figure 3
As in the previous example, it was selling pressure on the stock. While everyone is selling, the strategy calls for a purchase. The fracture of the lower band of Bollinger reported an oversold condition. This proved to be correct, as Yahoo soon turned. On Dec. 26, Yahoo re-tested the lower band, but not too close to them. It would be the last time Yahoo has tested the lower band as it marched toward the upper band.
Riding the ribbon
As we all know, each strategy has its drawbacks and it is certainly no exception. In the following examples show the limitations of this strategy happen and what can, if something does not work as expected.
If the policy is bad, the bands are still broken and you will find that the price continued to decline, as it leads the band down. Unfortunately, the price does not recover as quickly, which can lead to substantial losses. The long-term strategy is often true, but most dealers are not able to be able to refuse to resist occur before the correction.
Example 4: International Business Machines (IBM)
For example, IBM closed below the lower band of Bollinger 26th February 2007. The selling pressure was clearly in oversold territory. The strategy called for a purchase on the open market during the next session. As in the previous examples, the following trading day, a deposit, which was a little unusual to go to the selling pressure caused the stock market hard. The sale price was still well above the day purchased the stock and the stock continues to close below the lower band for the next four trading days. Finally, on March 5 was the selling pressure on and the stock and drove back to the middle band. Unfortunately, at this time the damage was done.
Example 5: Apple Computer Inc. (AAPL)
In another example, Apple closed below the lower Bollinger Bands December 21.2006.
Figure 5
The strategy calls for buying shares of Apple on December 22. The next day the stock fell one step. Selling pressure continued to take the stock to where it was hit a intraday low of $ 76.77 (plus 6% below the record), after only two days from when the item entered. Finally, the oversold situation, 27 Fixed in December, but for most traders who had to withstand a short drop from 6% in two days, this correction was small consolation. So, if the sale goes on in the face of clear oversold. While the sell-out, there was no way of knowing when it would end.
What we learned
The strategy was correct in using the lower band of Bollinger to highlight oversold market conditions. These conditions have been corrected quickly, since the shares started in the middle Bollinger Band.
However, there are times when the strategy is correct, but selling pressure. Although these conditions there is no way of knowing which end is when the selling pressure. Therefore, a protection that must be present when the decision was made to purchase. For example, in the shares of NYX intrepid increased after falling below the lower band of Bollinger has closed a second time, the strategy is good for us in the trade.
Both Apple and IBM were different because they do not break the lower band and rebound. Instead, they will continue selling pressure given the lower band and rolled down. This can often be very expensive. Ultimately, both Apple and IBM turn around and it turned out that the strategy is correct. The best strategy for us a trade that will continue the drive to protect the lower band is the use of stop-loss orders. In the search for this company, it became clear that the decision of five points that you would come out bad trades, but still would not tell you just those who worked. (For more information, see Stop-Loss Order - Make sure.)
Summary
Buy on a fragment of the lower band of Bollinger is a simple strategy that often works. In each scenario, the fraction of the lower band in oversold territory. The timing of trades appears to be the biggest problem. Stocks that break the lower band of Bollinger, and enter oversold face heavy selling pressure. This selling pressure is usually corrected quickly. If this pressure is not resolved, the shares have continued to make new lows and continue in oversold territory. To effectively use this strategy is a good exit strategy in order. Stop-loss orders are the best way to keep you from a stock that continues to protect the descent and the lower band to new lows.
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Bollinger Bands were created by John Bollinger in the 80's, and they quickly became one of the most commonly used in technical analysis. Bollinger Bands consist of three groups - upper, middle band and bottom - which are used to price short-term extreme in Spotlight safety. The upper band represents overbought, while the lower band can show you when a stock is oversold. Most technicians Bollinger bands in conjunction with other analytical tools used to get a better picture of the current state of a market or security. (To learn more about how Bollinger Bands are designed to be seen, the basis of the Bollinger Bands.)
The strategy
Most technicians Bollinger bands in conjunction with other indicators to be used, but we wanted a look at a simple strategy that uses only the bands, making business decisions. It turns out that buying the case of the lower band of Bollinger is a way to place the benefits of oversold conditions. In general, once broken in the lower band is due to strong sales, refund the purchase price of shares is above the lower band and head towards the middle band. This is the exact scenario of this strategy aims to capitalize. The strategy calls for a close below the lower band, then the purchase as an immediate signal to the stock, use the next day.
Example 1: Intel Corp (INTC)
Below is an example of how this strategy works in ideal conditions.
Figure 1
Figure 1 shows that Intel broke the lower band of Bollinger and ends on 22, including December. This was a clear signal that the stock was in oversold territory.
Our strategy is simple Bollinger band requires a close below the lower band a buy now followed the next day. The next trading day was not until December 26 when the dealer would give their positions. This proved to be an excellent commercial. December 26th marks the last time Intel would trade below the lower band. Since then, Intel has increased throughout the upper Bollinger band. This is a prime example of what the search strategy.
While price movement is not important, this example serves to establish the conditions that the strategy aims to highlight from profit transfer agreements. (For related reading, see the benefit of Squeeze).
Example 2: New York Stock Exchange (NYX)
Another example of a successful test of this strategy is on the map of the New York Stock Exchange where he broke the lower band of Bollinger 12 Found in June 2006.
Figure 2
NYX was clearly in oversold territory. Following the strategy of technical traders would purchase orders for NYX June 13 to give. NYX closed below the lower band of Bollinger for the second day, which can be caused some concern among market participants, but which would have closed the last time below the lower band for the rest of the month.
This is the ideal scenario, the strategy seeks to capture. In Figure 2, the extreme selling pressure and marked over the Bollinger Bands adjust for this, June 12 to sell the most serious. Opening a position on June 13 may give traders the right before the turn.
Example 3: Yahoo Inc. (YHOO)
In another example, Yahoo broke the lower band at 20 December 2006. The strategy called for immediate purchase from the next trading day.
Figure 3
As in the previous example, it was selling pressure on the stock. While everyone is selling, the strategy calls for a purchase. The fracture of the lower band of Bollinger reported an oversold condition. This proved to be correct, as Yahoo soon turned. On Dec. 26, Yahoo re-tested the lower band, but not too close to them. It would be the last time Yahoo has tested the lower band as it marched toward the upper band.
Riding the ribbon
As we all know, each strategy has its drawbacks and it is certainly no exception. In the following examples show the limitations of this strategy happen and what can, if something does not work as expected.
If the policy is bad, the bands are still broken and you will find that the price continued to decline, as it leads the band down. Unfortunately, the price does not recover as quickly, which can lead to substantial losses. The long-term strategy is often true, but most dealers are not able to be able to refuse to resist occur before the correction.
Example 4: International Business Machines (IBM)
For example, IBM closed below the lower band of Bollinger 26th February 2007. The selling pressure was clearly in oversold territory. The strategy called for a purchase on the open market during the next session. As in the previous examples, the following trading day, a deposit, which was a little unusual to go to the selling pressure caused the stock market hard. The sale price was still well above the day purchased the stock and the stock continues to close below the lower band for the next four trading days. Finally, on March 5 was the selling pressure on and the stock and drove back to the middle band. Unfortunately, at this time the damage was done.
Example 5: Apple Computer Inc. (AAPL)
In another example, Apple closed below the lower Bollinger Bands December 21.2006.
Figure 5
The strategy calls for buying shares of Apple on December 22. The next day the stock fell one step. Selling pressure continued to take the stock to where it was hit a intraday low of $ 76.77 (plus 6% below the record), after only two days from when the item entered. Finally, the oversold situation, 27 Fixed in December, but for most traders who had to withstand a short drop from 6% in two days, this correction was small consolation. So, if the sale goes on in the face of clear oversold. While the sell-out, there was no way of knowing when it would end.
What we learned
The strategy was correct in using the lower band of Bollinger to highlight oversold market conditions. These conditions have been corrected quickly, since the shares started in the middle Bollinger Band.
However, there are times when the strategy is correct, but selling pressure. Although these conditions there is no way of knowing which end is when the selling pressure. Therefore, a protection that must be present when the decision was made to purchase. For example, in the shares of NYX intrepid increased after falling below the lower band of Bollinger has closed a second time, the strategy is good for us in the trade.
Both Apple and IBM were different because they do not break the lower band and rebound. Instead, they will continue selling pressure given the lower band and rolled down. This can often be very expensive. Ultimately, both Apple and IBM turn around and it turned out that the strategy is correct. The best strategy for us a trade that will continue the drive to protect the lower band is the use of stop-loss orders. In the search for this company, it became clear that the decision of five points that you would come out bad trades, but still would not tell you just those who worked. (For more information, see Stop-Loss Order - Make sure.)
Summary
Buy on a fragment of the lower band of Bollinger is a simple strategy that often works. In each scenario, the fraction of the lower band in oversold territory. The timing of trades appears to be the biggest problem. Stocks that break the lower band of Bollinger, and enter oversold face heavy selling pressure. This selling pressure is usually corrected quickly. If this pressure is not resolved, the shares have continued to make new lows and continue in oversold territory. To effectively use this strategy is a good exit strategy in order. Stop-loss orders are the best way to keep you from a stock that continues to protect the descent and the lower band to new lows.
related srticles
Bollinger Bands | Common Chart Indicators | Learn Forex Trading ...
Bollinger Bands. Congratulations on ... Many traders have developed systems that thrive on these bounces and this strategy is best used when the market is ranging and …
Trade Using Bollinger Bands. Learn for Free
Description & examples of the Bollinger Bands indicator with the usage fully explained. Discover how this is a valuable tool for any trader.
Bollinger Bands | Official Bollinger Bands Products
Bollinger Bands can be applied in all the financial markets ... Also covered are some new methods for setting stops that marry well with Bollinger Band strategies.
Bollinger Bands Explained - The Bollinger Bands Strategy | The ...
Bollinger Bands can make you a lot of money, but do you know how to use them? Learn how to ride the Bollinger Band breakout all the way to the top.
Trading on Bollinger Bands | FOREX Strategies
Bollinger Bands were invented by John Bollinger in the eighties has 20 centuries and were once the most commonly used tool when using technical analysis.
other posts
- Doda Trend Indicator
- Osma Indicator Formula
- Fxbay Macd
- Set Fibo Price Any
- Schafftrendcycle Mq4
Forex is simple follow the trend and you will rich.
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