Trading with the Bollinger Bands

Introduced in 1983, ‘Bollinger Bands’ is a popular volatility indicator that can help traders confirm price trends and identify volatility squeezes. The following article is based on the book “Bollinger on Bollinger Bands” by John Bollinger.

Key Points

• Bollinger Bands is capable of defining high and low in the market
• Volatility is the key, as the two bands are constructed above and below a measure of central tendency
• There are 3 different methods to trade with Bollinger Bands
• Two indicators directly derive from Bollinger Bands, %b, and BandWidth
• BandWidth was created to measure ‘The Squeeze' pattern
• Bollinger Bars can help in pattern recognition by clarifying patterns such as M-tops, W-bottoms, momentum shifts, etc.

  Details

  Category: Technical Analysis

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Volume-Based Analysis and Indicators

Introduction to Volume Analysis and Volume Indicators

Volume analysis is a handy tool to confirm price trends, reversals, and breakouts and get a snapshot of the collective behavior of all market participants. The following article is based on the book “Trader’s Book of Volume” by Mark Leibovit.

Volume can track the footprints of institutional market participants who often camouflage their positions. These dominant players include large investment firms, mutual funds, and hedge funds. Volume analysis can recognize the volume patterns of these key players and uncover their tracks.

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Trading Naked Charts & Strategies

«Naked Forex High-Probability Techniques for Trading without Indicators» by Alex Nekritin and Walter Peters

The book «Naked Forex High-Probability Techniques for Trading without Indicators» presents the world's oldest trading style, which is trading naked charts without adding any technical indicator. Traders using naked charts start by determining major support and resistance and later focus on the price action near these levels.

These are some strong points made in the book:

Essential Steps for Successful Trading

These are the five steps:

(1) First comes the chart analysis

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The Turtle Experiment by Richard Dennis

"Winning traders may be made, not born"

The Experiment

In 1983, Richard Dennis and William Eckhardt started the “Turtle Experiment” to prove that anybody could be taught how to trade successfully. After placing an ad in The Wall Street Journal, thousands of novice traders applied but only 14 would make it through the first "Turtle" program. The program proved very successful. By the end of the experiment, the novice traders had generated tens of millions of dollars.

The Turtles used a trend-following system focusing on entry and exit rules, position sizing based on market volatility, and risk management.

Read more: The Turtle Experiment by Richard Dennis