Vladimir Ribakov shows how Bollinger Bands work: a 20-period moving average with bands at ±2 standard deviations that signal overbought and oversold moves. Watch for a band squeeze, where tight bands precede a sharp price move, then ride the trend as price hugs the band.
Chapters
Here is how you want to use the Bollinger Band indicator in your trading. Bollinger Bands, one of the most popular, versatile, and yet powerful indicators to analyze the markets, to spot volatility, to spot and identify potential trade setups for both trend reversals and trend continuation. The Bollinger Band consists of a moving average, 20 by default, with 2 deviations, 2 shifts which create the envelope we can see, the upper and the lower Bollinger Bands. These bands will help us to spot potential overbought conditions, oversold conditions in the market, and also breakouts, and how to ride a trend with it. So by default, the overbought conditions happen when the market is trending to the downside and the price retests or goes out of the upper band and bounces back inside. The oversold conditions are the opposite when the market is riding the lower Bollinger Bands, going out of that, closing out of the band, and then going inside to close inside, indicating a potential oversold condition. The breakout happens when the Bollinger Bands shrink and go into very narrow conditions like a bottle, and then it explodes and the market gains direction, and we can see price reaction And many times simply riding the bands dramatically fast and mainly profitable. And trend confirmations and continuations— when these breakouts actually happen and the price is riding on the band without the conditions of going dramatically below the band, close below, and pulling back inside— as long as it rides next to the band or right on the band without the extreme conditions, trend is healthy. The trend is there to continue and to move further in a given direction. For more trading education, complete courses, real-time trading opportunities, join our family, the Home Trader Club. Link in the bio.
