Bollinger Bands (indicator Bollinger Bands)
Introduction:
Indicator "Bollinger Bands" was created by John Bollinger (sometimes occurs transcription "Bollinger"), which received its name in honor of its creator. Prior to the creation of this indicator, there were many podomnyh indicators, but after the establishment of the indicator quickly became popular. At the moment, the indicator shows high accuracy of their data and signals, so it should be in service every trader. It is also called sliding convector.
Description:
Indicator Bollinger Bands - one of the most popular technical indicators, the principle of which is to reflect the relative value of the instrument, based on the instability (for simply speaking on the range and rate of change of prices). This indicator is located directly on the price chart and consists of three lines. First, the center is the simple moving average basis, while the indicator. The second, upper, is a strip of standard deviation, which is equal to MOP 2. Third, the lower is the opposite of the standard deviation band, which is equal to the SS - 2. Three lines, as mentioned above, create a price band.
John Bollinger noticed a significant caveat, as the price chart crosses the top or bottom line of the standard deviation of the price in the near future will come back into the corridor. Creator display this situation explains: when the price crosses the bottom line, the tool is underestimated, so the market quickly corrects the situation, returning the price of passage. When the price chart crosses the upper line, the opposite situation occurs. These actions can be called "fair treatment" to the financial instrument.
The use of the indicator:
Indicator "Bollinger Bands" provides sufficiently accurate signals to buy and sell financial instruments. If the price chart crosses the lower band, it is a signal to buy (buy), respectively, if the price crosses the upper band, it is a signal to buy (sell).
The bars are of practical significance, it can be used as support and resistance levels. Coming out of this can be traded on the graphs of small time (M1, M5) when the price is close right up to the level of support (the bottom line) - to buy, and when approaching the resistance level (upper line) - sell.
It is also worth to note - when the corridor is expanding, it is evidence that the trend wakes continue to grow, and when the corridor narrows, it is a signal that the trend is no longer valid and should leave the Rink.
Disadvantages indicator:
Of the disadvantages of the indicator Bollinger Bands, can be identified only by his inability to provide accurate data on the charts big time (H4, D1, W1, WN). You can apply it to a maximum of H1. Its use on large graphs halftime lead to loss of sensitivity indicator and as a result of the false data and signals.