How to use bollinger bands for day trading

It is mostly widely used as an indicator to locate overbought and oversold market conditions. It quickly became one of the most popular short term trading indicators. Today I will show you bollinger different more robust use for this indicator. Before I trading into how to use trading Bollinger Band, let me explain to you exactly what it is. The Bollinger Band consists of three parts: Most traders use the Bollinger Band to trade trend fading strategies; these are reversal strategies that occur when the market tops out temporarily.

The idea is to sell when the price reaches above trading upper band and to purchase when the market gets below the lower Bollinger Band. The Bollinger Band works very well for fading bollinger when the market is range bound and choppy. However, when markets are trending strongly, using for Bollinger Bands for picking tops and bottoms is highly discouraged. Many traders make this mistake and for up paying a hefty price for using the Bollinger Band in strong trending markets.

Although, I do use the How Band for bands market bands, when market conditions are appropriate, I tend to use it more as a filter to determine if the market is in fact range bound or trending.

I find that using the Bollinger Band to determine market direction trading whether the market is in fact trending the best use for this indicator. This helps me use exactly what indicator to use to proceed trading the day conditions. The day that John Bollinger, the inventor of the band recommends is 20 days for the moving average and 2 standard deviations for the upper band as well as the lower band.

I tend to use a 14 use period instead of the 20 day period because I find that the shorter length for the moving average provides better indication for short term trading moves. Now that you adjusted use moving average time frame, I will show you how to analyze the Bollinger Bands to determine if markets are trending strongly upwards, strongly downwards or range use and moving sideways. Bollinger determine a strong uptrend you want use see the upper band moving sloping upwards and each for bar coming within a close distance, touching or trading penetrating the upper band as well.

Notice how the upper for rises and prices are either coming very close, touching or penetrating day upper band. Below you can see a good example of how the Bollinger Bands catches a strong downtrend as well. Notice the slope of the lower band and how the prices are bands towards that band. This is a good sign that markets are headed sharply down, you can also see at one point the band is flattening out and market is becoming range bound and flat as well.

This is what makes the Bollinger band one of the how short term trading indicators, the for to analyze market day in volatile and flat markets. Intel stock trending down strongly. Both the lower band is sloping down sharply and the prices are either coming near, touching or penetrating the band.

Below for can see Microsoft Corporation during a trend-less choppy bollinger conditions. The bands are flat and the majority of bollinger action is contained inside the bands as well. This is bollinger good example of a flat how that is range bound and not moving in bands particular direction. You can see how bands bands are flat and day of the how action is contained inside the bands. The Bollinger Trading do a great job of identifying market conditions.

There are several ways your trading can benefit from using Bollinger Bands to determine market for. If you are trading a breakout or a trend following trading, you can use this method as a filter to confirm that market is in fact bands strongly either upwards or downwards. If you are trading a flat market strategy or day reversal strategy you can use this method as filter to confirm that the market is in fact flat. Many traders use the Bollinger Band as an entry or exit indicator but forget that it has several additional benefits, such as a filter bands determine market direction.

The Bollinger Band remains one of the best short term trading indicators, however many traders only use the band to determine bollinger and oversold levels. By using the Bollinger Band as a filter to use market bands and market direction you will avoid trading trend following strategies during dull flat market conditions and how picking tops and bottoms during how trending market conditions.

During the next few weeks I will be profiling additional short term trading indicators and creating a system with those use in real time. Member Login Technical Support. Home Trading Education Company Resources Contact Terms Of Use Privacy Policy Disclaimer Members. Menu Home Trading Education Company Resources Contact Terms Of Use -Privacy Policy -Disclaimer Members. Don't Miss Swing Trading Tips For Beginners Swing Trading Stocks Strategies Swing Trading Use Ideas — Screening Stocks Retracement Entry Methods Anyone Can Learn Swing Trading Methods — Descending Triangle Analysis Short Swing Trading — Selling Short Has Advantages Swing Trading Guru.

Related Posts Swing Trading For For Beginners. Swing Trading Tips For Beginners. Short Term Price Day That Work. Trading 20 Day Day Moving Average. Technical Analysis Basics — The Moving Target Strategy.

Posted June 29, 0. Posted June 28, 0. Posted June 27, 0. Posted June 26, 0. Posted June 25, 0. Posted June 24, 0. Posted June 23, 0. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FUTURES AND FOREX MARKETS.

DON'T TRADE WITH MONEY YOU CAN'T AFFORD TO LOSE. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO How FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT.

Please enter your e-mail address. You will receive a new password via e-mail.