Hello traders, today I will explain you about one of the best indicator (BOLLINGER BANDS) which is used by many of the traders for both long and short term.
I will be using BB for BOLLINGER BANDS so don’t be confused.
Q) What is BB?
Ans) BB indicator is used by traders to predict volatility in market. It is usually used to predict what will be next move in the market either bullish or bearish. It also helps to predict a strong bullish or bearish movement in the market by its squeeze indication which I will explain below.
Q) What setting to be change in BB so that it is easier to read?
Ans) I prefer Trading View for chart analysis so I will tell according to that.
First go to the setting of BB and then under Inputs change StdDev to 3. After that go to Style Change Basis colour to black, Upper colour to red and Lower colour to green. You can change to any colour of your choice but I preferred these colours because it is easier to read.
Q) How to read BB lines?
Ans) The upper red line of BB assumes it as resistance and the lower green line of BB assumes it as support and the middle black line assume it as both resistance and support. If the candle makes base or support at the green line then the next few candles will go up. And if the candle make support from down or resistance at the upper red line then the next few candles will go down. If in the market there is a squeeze in both the upper- and lower-line BB then it is an indication of strong bullish or bearish movement going to happen in the market.
Q) During which time frame should we use BB?
Ans) For day trading (in nifty and bank nifty) or intraday use 5 minutes and 15 minutes. For swing trading use 1 day. Avoid using this indicator in 1 minute’s time frame because it is not so accurate.
Q) When to wait even if the BB given the signal to buy or to sell the stock?
Ans) If the market is in uptrend or bullish then all the candles should come above the middle black line and if the market is in downtrend or bearish then all the candles should come below the middle black line. If the candle cut the black line, then you should wait unless the candle make support at the lower green line at then go up again. Same when the candle cut the black line then you should wait unless the candle make resistance at the upper red line at then go down again. Treat the middle black line both as support and resistance both in bullish or bearish movement in the market.
Q) Sometimes there is a false Indication in BB so how to make it more accurate?
Ans) But sometimes there is a false movement in BB so do not only use it as the only indicator for the movement of the stock price. I suggest you to use the indicator MACD and RSI with BB. By using this it will save you from false indication of BB.
I WILL ALSO POST THE BLOGS ON OTHER INDICATORS
It is only for educational purpose which I have studied and test in the market. Any decision you take during the market is your own responsibility.