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What the Heck is a Bollinger Band Anyway?
In 1980 John Bollinger came up with the formula called Bollinger Bands. Bollinger used a moving average with two trading bands above and below it. Unlike a percentage calculation from a normal moving average, BB’s simply add and subtract a standard deviation calculation (a formula that measures volatility). When stock prices continually touch the upper BB the prices are thought to be overbought; conversely, when they continually touch the lower band, prices are thought to be oversold, triggering a buy signal. I like to use Bollinger Bands on monthly charts. For a longer timeframe, it’s an incredibly reliable ... (full story)