Detailed explanation of the Boll indicator, what about the Bollinger Bands indicator?

The boll indicator is a very popular technique. Many investors feel that the closer the price is to the upper range, the more overbought the market is; the closer the price is to the lower range, the more oversold the market is. When the boll indicator is used as a trading system, there are a set of 22 rules that must be followed. This article will introduce the boll indicator and how the Bollinger Bands look.

Detailed explanation of boll indicator

The first application of the boll indicator is a simple moving average that measures security issues, usually with a 20-day SMA. The 20-day moving average will take the average of the previous 20-day closing prices as the first data point. The next data point will decrease the original price, add the 21st day price, then take the average, and so on. Next, obtain the standard deviation of the security price. The standard deviation is a mathematical measure of the variance of the mean, which has obvious basic characteristics in statistics, economics, accounting and finance. For a given dataset, the standard deviation measures the distance between the numbers and the mean. The standard deviation can be measured from the square root of the variance, which itself is the mean of the squares of the differences between the means. Next, multiply the standard deviation value by 2, then add or subtract this value to each point on the SMA curve. This class produces the upper and lower bands.

How to look at Bollinger Bands

The moving range of the stock price channel formed by the upper, middle and lower trajectories of the BOLL indicator is uncertain, and the upper and lower limits of the channel change with the up and down fluctuations of the stock price. Under normal circumstances, the stock price should always run within the stock price channel. If the stock price runs out of the stock price channel, it means that the market is in an extreme state.

Bollinger Bands Levels

The upper, middle, and lower tracks of the Bollinger Bands are almost horizontal and out of the shape of an equal sign. This is the easiest sideways market to judge. At this time, combined with the reversal signal, the highs are bought to fall, and the lows are bought to rise, and the winning rate is extremely high.

Bollinger Bands Opening

The opening of the Bollinger Band means that the upper and lower rails of the Bollinger Band are trumpet-shaped and have a figure-shaped outer shape. At this time, the exchange rate fluctuates violently, and it is easy to break through to form a unilateral market, which is suitable for homeopathic trading. Friends who like to make orders against the trend must resist the temptation at the position where the Bollinger Bands open, and give up the signal that they should not make a move.

Bollinger Bands Narrowing

Bollinger Bands are narrowed, similar to an inner character, and the horn is narrowed. At this time, the long and short forces of the exchange rate are evenly matched, and it is temporarily impossible to clearly judge the market trend. At this time, the K-line is often very short and dense, and the trend is irregular. For this reason, investors are not advised to enter the market for trading.

Bollinger Bands Parallel Up or Down

When the Bollinger Bands are almost parallel upward or downward, it indicates a unilateral market that lasts for a long time. At this time, the trend is obvious, and it is not appropriate to reverse the trend. If you insist on reversal trading, you can do a homeopathic reversal, combined with the Bollinger middle rail or the 14-day moving average and the trend channel, to do a homeopathic reversal of the secondary wave callback.

In the BOLL indicator, the upper and lower rails of the stock price channel are the highest and lowest price levels that show the safe operation of stock prices. The upper rail line, the middle rail line and the lower rail line can all support the operation of the stock price, while the upper rail line and the middle rail line can sometimes exert pressure on the operation of the stock price.

Usually, when the stock price runs above the middle line of the Bollinger Bands, it indicates that the stock price is in a strong trend; when the stock price runs below the middle line of the Bollinger Bands, it indicates that the stock price is in a weak trend.

When the Bollinger line narrows with time advancing, greatly increasing, the upstream, midstream and downstream rails step by step method, when the difference in use value between upper and lower rails is close to 10%, it is the best time to buy and sell.

When the stock price rises for a period of time but the increase is not too large, the stock price adjusts for a few days, then the boll indicator channel chart produces a steady rise, but the rail above is blocked and then returns to the middle of the boll indicator line. If you stand in the middle for three days, you can consider intervening.

Regarding the issue of boll Bollinger Bands, this article has made a detailed illustration of the boll indicator and introduced how to look at the Bollinger Bands. It can be seen that Bollinger Bands are very important information indicators. Investors must understand and use Bollinger Bands well, so as to make their investment transactions more favorable.