| Bollinger bands are probably my favorite technical | | | | You will find most stock market charting software |
| indicator. I have been trading stocks for twenty plus | | | | has them as a choice of technical indicators. In |
| years now, and I use Bollinger bands to some extent | | | | general I would recommend just staying with the |
| in EVERY trade I make. They bands were of course | | | | parameters of the stock software when placing the |
| developed by the highly regarded technician, John | | | | bands on your chart. An advanced trader can change |
| Bollinger. You can find numerous high quality books | | | | the inner settings, but that really is not necessary for |
| and writings of his. I use Bollinger bands because they | | | | even the intermediate trader. |
| never seem to fail. | | | | My main strategy to find good stock choice is to |
| Bollinger band are simply a high and low ranging | | | | screen for stocks that are outside of there current |
| channel on a stock chart. The inner workings of the | | | | upper or lower bounds and place a trade for a |
| calculations are beyond the scope of this article. | | | | reversal. You may do this by purchasing the stock |
| Stock prices rarely break through the upper and | | | | (going long) or shorting the stock. Another choice |
| lower ranges of the moving averages. When they | | | | would be to use stock options to accomplish the |
| do, you can readily expect that eh stock price will | | | | same thing. This is the approach I mainly choose. |
| come back into the channel in a prompt manner. | | | | Stock options can be risky though and I would never |
| Since I am mainly a swing trader (trades lasting 3-15 | | | | advise them for the novice investor. Just keep in |
| days), I use the indicator based on an hourly chart. | | | | mind the risk/reward ratio of any potential stock |
| The nice thing is that no matter your trading horizon, | | | | trade you may make. You will find that Bollinger |
| Bollinger bands can be used in your trading decisions. | | | | bands will help in assessing that potential risk. |