In this post you will learn that how can we do Bollinger band settings for 5 minute chart and we teach you the whole process of bollinger band setting for 5 minutes scalping strategy
Bollinger Bands is a form of chart indicator that is used for technical analysis. They are extensively used by traders across a variety of markets, such as stocks, futures and currencies.
The band was created through John Bollinger in the 1980s The bands provide unique insight into volatility and price.
In reality there are lots of applications for Bollinger Bands for instance, for example, determining overbought or oversold levels, or as an instrument for trend-following and to monitor for breakouts.
Overbought and Oversold Strategies
The most common method of using Bollinger Bands is to spot market conditions that are either overbought or too sold.
If the value of the asset falls below the lower limit that is the Bollinger Bands(r) The price may have fallen too far and may be because of bounce.
In contrast, if prices break over the upper band it could indicate that the market is overbought and in need of an eventual pullback.
Utilizing the bands as indicators of overbought or oversold is based on the idea of mean reversion price.
Mean reversion presumes that, if the cost differs significantly from the average or mean then it will eventually revert to the average price.
In markets with a range Mean reversion strategies could be effective, since prices move between the two bands as if they were bounced ball.
But, Bollinger Bands(r) don’t always provide accurate signals to buy or sell. When a trend is strong such as this trading, traders are at possibility of placing trades on opposite sides of the movement since the indicator could flash signals of overbought or undersold too quickly.
To fix this issue the trader should take a look at the general direction of price, and then only consider trade signals which align the trader with the current trend.
For instance, if the trend is downwards then only buy shorter positions whenever the higher band is being tagged.
The lower band could be used for an exit, if one wants to, but the possibility of a new position in long cannot be opened as that could be a violation of the trend.
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