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2006 Nov 04 - Sat

Bollinger on Bollinger Bands

From a technical analysis perspective, I think the best book I've ever purchased is Bollinger on Bollinger Bands by John Bollinger. It's 228 pages covers a number of interesting concepts. It does indeed cover the concept for which Bollinger is famous: the volatility indicating Bollinger Bands. Since signals typically require corroborating evidence, he makes use of Arthur A. Merrill's Five Point Patterns as well as a number of different volume indicators.

Bollinger Bands can be used in Contrarian Trading as well as in Trading with the Trends. The hard part of found is figuring out when to transition from one to the other. Contrarian Trading means taking an opposing position when one of the band limits has been reached. It is at this critical decision point when you have to decide to keep the position and see if the trade is going to 'walk the band' (Trade the Trend), or if indeed, it will reverse direction. This is where various other indicators such as MACD, Candles, and Volume can help trip the appropriate trigger.

Having introduced his various indicators, Bollinger then proceeds to describe some trading strategies such as The Squeeze, Trend Following, and Reversals.

I've found that Bollinger bands help delineate any type price data, whether it be daily bars, 1 minute bars, trades, or even quotes. I've used quite a number of different indicators, but the ones that frequent my charts the most are Bollinger Bands.

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