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Bollinger Bands, Volatility And You
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Bollinger Bands, Volatility And You

Bollinger Bands are one of the most dynamic and versatile trading tools on the market. The IQ Option
indicator was created by John Bollinger in the early 1980s and captures one of his deepest
insights. The idea that volatility was not static, that it changed from day to day, a thought Binary.com
contrary to popular market belief at the time. The tool presents as an envelope, similar to
moving average envelopes, Keltner Channels and others but is based on measures of
volatility. The bands are created from a standard deviation of price movement over a set
period of time, much like basic volatility indicators such as historic and relative volatility. In my Minimum Deposit Binary Option Brokers

opinion, this is the best tool for measuring volatility but also a great tool for binary options Bitcoin Binary Options
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traders to understand. It can be used in a wide variety of ways, gives of a number of easily
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recognizable signals and can be used as a stand alone indicator or with a package of other
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tools.
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The tool is intended to show when prices are high or low relative to past price action. This No Deposit Binary Options
means that prices are considered to be high when at the upper band and low when at the 60 Second Binary Options
lower band. The indicator includes a total of three lines. The first is the central signal line, Best Forex Brokers
usually a simple moving average that is typically set to a period of 20. The same data used for
the center line is then used to create the other two bands, the Bollinger Bands . These are a
standard deviation of the central line, usually 2 but it, like the moving average itself, can be IQOptions Robots; Automated Trading For The
adjusted to your liking. Because the bands are based on a standard deviation of price Masses
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mentioned above, alongside other indicators, but here I will go over some of the basic signals
that binary traders can use.

Simple And Profitable Bollinger Band Signals

The most signal is the simple expansion and contraction of the bands themselves. This
represents increases and decreases in market volatility. When compared to price action and
other indicators these swings can be powerful confirming indicators. For example, the bands
have narrowed and the market trended in a tight sideways range and then the bands begin to
widen. The widening of the bands means that volatility is beginning to creep into the market,
suggesting a stronger move than normal. Your complimentary analysis tells you the market
is about to sell off so you can assume that the move will be to the downside. Additionally, if the
market has been trending and the bands are very wide, then begin to contract, you can
assume that the trend is cooling off and then look for entries to suit.

You can also use the bands themselves to give signals. The rules for this vary from trader to
trader and style to style, a sign of how adaptable the tool is. The following rules are more like
suggestions and should be applied carefully when you first begin to use them with your
strategy. The first is that when the bands widen following a period of contraction and price
moves to touch either band it is often an indication of direction. There may be a pullback
following the first touch but so long as prices do not overly exceed the bands they can be
expected to continue in that direction into the near term.

Another signals occurs after the bands begin to widen and volatility has picked up. Basically,
the bands provide limits where the market is considered to be highly priced. Usually, when
prices exceed the band on either side it signifies that market has gotten ahead of itself and
prices are extremely high or extremely low and about to pull back. This signal is good for
really short term entries. This signal is incredibly accurate when used with Fibonacci

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signals. This could be a crossover which means that prices are likely to continue to the
opposite band or they will be reversals, and prices will move back to the band they just left.

Look at the chart above. At point 1 price move from a period of low volatility to high volatility,
indicating a move is on the way. They hit the upper band but exceed it, indicating the trend is
up but that prices may pull back first. At point 2 prices have pulled back, to the center signal
line, where they bounced in line with the original indication at point 1. At this time prices move
higher again but at point 3 again exceed the band and indicate a pull back. The next pull back
was mild, but tradeable, and lead to another trend following entry. Now, at point 4 prices are
brushing the upper band but not exceeding it, indicating the trend is up and strong, but not
overly priced with no indication of a pull back. When prices meet resistance it fails, as

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Related posts:

1. How To Apply Volatility

2. Volatility In A Hand Basket

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