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What are Bollinger Bands?
Bollinger Bands are envelopes plotted at a standard deviation level above and below a simple moving average of the price. Because the distance of the bands is based on standard deviation, they adjust to volatility swings in the underlying price. Bollinger Bands use 2 parameters, Period and Standard Deviations, StdDev.What is a double Bollinger Band® strategy?
The Double Bollinger Band® strategy has a wide variety of applications but provides the most value when assessing the momentum and volatility of price action. It allows traders to pinpoint entries and exits as well as identify when a trend is maintaining or losing momentum.When is a Bollinger Band considered overbought?
The consensus is that when the price reaches the upper band, it is considered as overbought, and when the price approaches the lower band, it is deemed to be oversold. What are Bollinger Bands used for?What is a Bollinger Band Squeeze?
The "squeeze" is the central concept of Bollinger Bands®. When the bands come close together, constricting the moving average, it is called a squeeze. A squeeze signals a period of low volatility and is considered by traders to be a potential sign of future increased volatility and possible trading opportunities.