Tips for using Bollinger Bands

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The Bollinger Bands trading "formula" with a very high success rate;

1, the first trading point

From the upper rail back down to the lower rail or from the lower rail back up to the upper rail are from the super-strong area to the general area. At this point, if the rise or fall again to create a new high or low, but did not effectively return to the super-strong area again, it shows that the trend of the stock price has entered a negative state, but also indicates that the first type of buying and selling points have appeared.

Mouth: super retracement, new high a sell; super low recovery, buy at the new low

2, the second type of trading point

Entering the negative state, the upper and lower rails will have a lagging reaction, that is, after the first decline or recovery, and then go up or down, the upper and lower rails will be inflected. At this point, the inflection of the upper and lower rails will generally become the greatest resistance and support, to build the second type of buying and selling points, below or above it.

Mouth: the upper rail counter-pressure, not a new high; the lower rail lifted; no new is low

3. The third type of trading point

Generally speaking, the Bollinger Bands' closure is the best reminder of the end of the negative time. This time investors should pay attention to the skillfulness of the analysis, do not look at a minute must look at the Bollinger Bands a minute, because the Bollinger Bands a level of closure means that this lower level of a certain negative process level to expand or end, generally corresponds to the corresponding third category of buying and selling points.

Formula: channel closure, lower level three transactions.

There are several points to consider when using Bollinger Bands as a stop-loss tool.

Take the daily k-line as an example. In an uptrend, the stock is running above the middle Bollinger Band. At this point:

If the stock price falls below the middle Bollinger Band, it indicates that the market is turning from strong to weak and the finishing time will be extended. At this time short and medium term investors need to stop loss.

If the Bollinger Band has a bell-shaped opening and the three rail lines are going down at the same time, then the market's weak characteristics are very obvious, and medium- and long-term investors also need to consider stopping their losses.

If the stock is running upwards on the upper rail, the short term is a surge market. When the stock price away from the upper Bollinger Band, the market overbought phenomenon is serious, profit-taking may sell at any time, the market short-term risk is greater. When the stock price fell back to the upper rail line below, means that the short-term strength has subsided, the market may enter the consolidation. This is the time for short-term stop-losses.

A bell-shaped flare on the Bollinger Bands indicates that the stock has ended its previous uptrend and the market is in a short- or medium-term consolidation. Therefore, when the upper line of the Bollinger Band appears to be moving down and the distance from the center line is shortening, it means that a closing bell flare of the Bollinger Band is beginning to form. This is when short and medium-term investors take stop-loss measures.

Otherwise, contrary to the above, at this point:

This pattern is a downtrend and there is a clear risk in the market itself. Therefore, investors should sell their shares when they encounter a suitable opportunity such as a rally.

(2) If the stock price breaks through the center rail line upwards, investors can use the price of the center rail line as a stop-loss when it is difficult to grasp whether the market has turned stronger.

In the short-term rebound operation, if the stock price falls below the lower Bollinger Band, it indicates that the market has the possibility of accelerating the decline, investors had better avoid such risks.

Synthesizing the above various situations, it is necessary to say that the actual combat in the notes. Bollinger Bands in order to improve the success rate in practice, often need to be combined with averages, more volume, k-line patterns and other various technical indicators to determine the general trend of the market.

Related Q&A: Related Q&A: What are Bollinger Bands and how do I use them?

Today, Dao Yi give you an in-depth illustration of the Bollinger Bands indicator, we must not underestimate these most basic indicators, especially the technical side of the trading stockholders, often these most basic indicators phase combination together, and then according to the characteristics of each indicator to analyze the judgment, but can better avoid the bear market to grasp the bull market.

The following Dao Yi mainly around the composition of the Bollinger Bands, the role of the Bollinger Bands, as well as the use of skills to explain step by step.

The composition of Bollinger Bands and their role

Bollinger Bands are composed of upper, middle and lower three rail lines, the middle rail is the 20-day moving average.

The middle rail represents the main trend of the market, when the middle rail is up, it indicates that the upward trend dominates the market development; when the middle rail is down, it indicates that the downward trend dominates the market development; when the middle rail is running horizontally, it indicates that the market enters into a hold, the lack of a clear trend.

The upper and lower rail lines constitute the usual range of price fluctuations, so that the upper rail line has a resistance effect on the price, and the lower rail line has a supportive effect on the price.

The use of Bollinger Bands

1, BOLL closing: track from wide to narrow to do convergence, indicating that the market is about to break out (up and down breakout are possible), should be alerted.

2, the closing price fell below the lower rail: indicating strong support, there is the possibility of a rebound, the original short should consider going out

3, the closing price rose over the upper rail: indicating strong pressure, there is the possibility of a gearback, the original long should consider going out

4, the closing price rose over the middle rail: at this point, once in the middle of the rail feel the pressure and weakness, the middle of the rail is in the pressure band, the sell signal. Sell signal.

5, the closing price fell below the center rail: at this point, once in the center rail at the support and firm, the center rail is also a support band, buy signals.

The above is the use of Bollinger Bands indicator, of course, the real battle, but also need to combine some other aspects of comprehensive judgment. There are four main functions of Bollinger Bands, which you can combine to see.

1. Bollinger Bands can indicate support and pressure positions

2. Bollinger Bands can show overbought and oversold

3. Bollinger Bands can indicate trends

4. Bollinger Bands have a channel function