How to make money using Bollinger Bands
Bollinger bands is a technical analysis devised after adding statistical technique to a moving average.
Statistical techniques mean using standard deviations of price movement to determine the price volatility with certain probability.
The Bollinger band draws a line in ± 1σ (the first standard deviation), ± 2σ (second standard deviation), and ± 3σ (third standard deviation) from the center towards the outside; investment decision can be judged from position and directionality of the present value.
If the value falls to break – 2 σ lines, yet rebounds to rise from there, it is a signal for “buying”.
If the value exceeds +2σ or falls far below -2σ, it is a signal for selling.