Bollinger Bands StrategySimply put, Bollinger Bands consist of three lines plotted on a price chart to form an envelope around price action. The middle line of the three is a moving average with the upper and lower lines being a deviation or "standard variation" of it. "The purpose of Bollinger Bands is to provide a relative definition of high and low. By definition prices are high at the upper band and low at the lower band. This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions" - bollingerbands.com. Unlike other technical indicators which often lag behind price movement ane are therefore used mainly for confirmation of price change, Bollinger Bands are often used to make primary trading decisions even though it is thought by some that they work best in conjunction with fundamental analysis. The video below shows how to use the bands in your FOREX trading.
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