### Introduction

3/30/ · How to trade with the trend using Bollinger bands. Here’s the deal: You know the middle line of the Bollinger Bands is simply a period moving average (otherwise known as the mean of the Bollinger Bands). And in strong trending markets, the period moving average . Bollinger Bands consist of a band of three lines which are plotted in relation to security prices. The line in the middle is usually a Simple Moving Average (SMA) set to a period of 20 days (the type of trend line and period can be changed by the trader; however a 20 day moving average is by far the most popular). The Bollinger Bands® are based on a simple moving average. This is because a simple moving average is used in the standard deviation calculation, and it is good to be logically consistent. Make no statistical assumptions based on the use of the standard deviation calculation in the construction of the bands.

### Description

Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average. The look-back period for the standard deviation is the same as for the simple moving average. 5/7/ · Bollinger Band®: A Bollinger Band®, developed by famous technical trader John Bollinger, is plotted two standard deviations away from a simple moving average. 8/28/ · Bollinger bands have three lines, an upper, middle and lower. The middle line is a moving average of prices; the parameters of the moving average are chosen by the trader. There is no magic moving average number, so the trader can set the moving average so it aligns with the techniques discussed below.

### BOLLINGER BANDS RULES

The Bollinger Bands® are based on a simple moving average. This is because a simple moving average is used in the standard deviation calculation, and it is good to be logically consistent. Make no statistical assumptions based on the use of the standard deviation calculation in the construction of the bands. 8/28/ · Bollinger bands have three lines, an upper, middle and lower. The middle line is a moving average of prices; the parameters of the moving average are chosen by the trader. There is no magic moving average number, so the trader can set the moving average so it aligns with the techniques discussed below. 5/7/ · Bollinger Band®: A Bollinger Band®, developed by famous technical trader John Bollinger, is plotted two standard deviations away from a simple moving average.

### BOLLINGER BANDS

Description. Bollinger Bands are a type of price envelope developed by John Bollinger. (Price envelopes define upper and lower price range levels.) Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Bollinger Bands are comprised of three lines – the upper, middle, and lower band. The middle band is a moving average, and its parameters are chosen by the trader. The upper and lower bands are positioned on either side of the moving average band. The trader decides the number of standard deviations they need the volatility indicator set at. Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average. The look-back period for the standard deviation is the same as for the simple moving average.

### What Are Bollinger Bands?

Bollinger Bands consist of a band of three lines which are plotted in relation to security prices. The line in the middle is usually a Simple Moving Average (SMA) set to a period of 20 days (the type of trend line and period can be changed by the trader; however a 20 day moving average is by far the most popular). Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average. The look-back period for the standard deviation is the same as for the simple moving average. 8/28/ · Bollinger bands have three lines, an upper, middle and lower. The middle line is a moving average of prices; the parameters of the moving average are chosen by the trader. There is no magic moving average number, so the trader can set the moving average so it aligns with the techniques discussed below.

## Recent Comments