What is Bolinger Band? How to use it in Chart?

  • Bolinger Band is developed by John Bolinger.
  • Bolinger band contains three line that is known as upper line middle line and lower line.
  • Distance between upper line and lower line is calculated by standard deviation.
  • Middle line is a Simple moving average of 20 (20 SMA)
  • The price of a stock will be trade within upper line and lower line.
  • If price of stock breaks the level of upper or lower due to some news or high volatility, it will come back within the range.
  • You can see in your chart by adding bolinger band, During the low volatility Bolinger band gets tightened and then price of a stock start moving in uptrend or downtrend.
  • You will get to know about the stock price whether the price is high or low.
  • You can verify the trend also using Bolinger band, If bolinger band is moving upward with the price, it means stock is in uptrend.
  • If bolinger band moving downward with the price then it’s called down trend.
  • Most traders take positions when the price of a stock hits the middle line or lower line in uptrend.
  • If trend is downward and Bolinger band is also moving downward then you may book your profit on touching middle line or upper line.

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