Placeholder Image

Subtitles section Play video

  • Welcome to the Investors Trading Academy talking glossary of financial terms and events.

  • Our term of the day isBollinger BandsBollinger Bands are volatility bands placed

  • above and below a moving average. Volatility is based on the standard deviation, which

  • changes as volatility increases and decreases. The bands automatically widen when volatility

  • increases and narrow when volatility decreases. This dynamic nature of Bollinger Bands also

  • means they can be used on different securities with the standard settings. For signals, Bollinger

  • Bands can be used to identify M-Tops and W-Bottoms or to determine the strength of the trend.

  • Standard deviations are a statistical unit of measure describing the dispersal pattern

  • of a data set. By definition, one standard deviation includes

  • about 68% of all data points from the average in what is referred to as a normal distribution

  • pattern, while two standard deviations include about 95% of all data points.

  • When working with Bollinger Bands, it is not necessary for you to calculate standard deviations

  • yourself. You need only understand the theory of how standard deviation sets the range for

  • a dispersal of rates when compared to the moving average, and how this information is

  • used to determine buy and sell channels in the chart.

  • The area between the moving average line and each band produces a range, or channel.

  • The area above the moving average is referred to as the buy channel as prices displayed

  • in this region remain higher than the moving average and suggest upward momentum. Conversely,

  • prices falling below the moving average are in the sell channel as the spot rate is declining

  • more rapidly than the moving average which suggests that the exchange rate has downward

  • momentum.

Welcome to the Investors Trading Academy talking glossary of financial terms and events.

Subtitles and vocabulary

Operation of videos Adjust the video here to display the subtitles

B1 moving average volatility average standard standard deviation moving

What are Bollinger Bands?

  • 141 20
    richardwang posted on 2015/08/24
Video vocabulary