Bollinger Bands Indicator Explained for Making Profit in Share Market


Friends please subscribe to my you tube channel
and once you are subscribed please do not forget to hit the bell icon to get my next
video updates almost instantly. Thank you. So, welcome back friends, our today’s webiner
topic is Bollinger Bands. And this is one of these top four or top five
important indicators that you must know. if you are a newbie, if you are a professional
trader, if you are a veteran whatever you be, you need to know about bollinger bands. So, what are bollinger bands actually. I have actually covered till the bollinger
% b indicator in my indicator series. If you did not saw any of the videos in my
indicator series, I will suggests you to go through the previous videos. So, bollinger bands, as the name suggests,
it is just a band surrounding the price. So, bollinger bands is just a band surrounding
the price and we have previously covered ATR bands. So, it is another kind of bands but it is
of utmost importance. So, before I go deep into the webiner, let
me give you a short into of mine. I am Indrajit Mujherjee. I am a trader, blogger and trading system
developer. So, I am the founder of StockManiacs.net. So, you can visit my website at Stockmaniacs.net. This is my youtube channel and you will get
the link to my website in my channel itself. You can also subscribe to me in youtbe because
if you subscribe, you will get my next video updates instantly. And, you can also join my trading team by
opening a trading and demat account with me with my partner brokers. To join me simply whats app me +91-9674321856. I will repeat the whats app number once again,
it is +91-9674321856. Here, is the link to connect to me in whatsapp
directly. You can click here and you can connect to
me in whatsapp. This is the link to join me in facebook. This is the link to connect to me in Twitter. So, firends, let us continue with to the webiner. As we told that bollinger bands is a band
surrounding the price. So, how bollinger bands is calculated. So, actually, bollinger bands has three components,
an upper band, a middle band, and a lower band. So, how it is calculated. The middle band is simply a 20-period moving
average. So, it is very simple, middle band is simple
a 20-period moving average. And how the upper band and lower band is calculated. So by default the standard diviation level
is taken as 2. So the upper band is middle band plus 2 standard
diviation and the lower band is middle band minus 2 standard diviation. So this is how the bands are calculated. So there is a FAQ in this blog post. This blog post actually covers most of the
strategies of bollinger bands. So I will give you the link of the blog post
in my video description. So, you can go to the blog post from the video
description itself. So, before we continue, let me show you how
to attach the bollinger bands on charts. Let me show you live. So, this is Zerodha kite chart. So, I believe that you are already having
some charts in front of you. If you do not have, you can get Zerodha kite. If you want to get Zerodha kite, I will leave
the link to get Zerodha kite in the video dexcription. So, it will take one day or two days to open
an account with Zerodha. And you can get, you can access the bollinger
bands instantly after you open the account. So, this is the YES bank to our chart. So, there is a STUDIES section. In the Studies section, you will get the bollinger
bands. So, this is the bollinger bands. So, just click on bollinger bands and the
default parameter window will open. So,by default the field is close, the period
is 20 because the moving average is 20. The middle band the moving average is 20. This middle band is simply a 20 period moving
average and the standard diviation is 2.And, moving average type is simple. SO, that means this middle band is 20 period
simple moving average. The upper band is middle band plus 2 standard
diviation. And the lower band is middle band minus 2
standard diviation. So, in this way the bands are formed. So, these bands will actually cover the price. It willl cover the price. So, you can use the channel fill option. If you do not fill the channel fill option,
in that case, the bands will not be filled. So you can also change the colors of the bands
just like you can change the color of the top band, you can change the color of the
median, that means the middle band and you can change the color of the bottom band. So, I am not changing any color, I am keeping
it defaults. So, let us click on done. So, this is you can get the bollinger bands
on the charts. So, in the similar way, you can also get bollinger
bands on other charts like Upstox pro or any other platform that you are having. I will show how you can get Bollinger bands
on Upstox pro also. So let me first maximize the chart. So in Upstox Pro, here are the indicators. So you can get bollinger bands from here. You can see the same kind of parameters are
there. So you can change the colors, you can change
the periods, you can change the standard diviation. Let me keep it just default. Click on apply and the bollinger bands will
be applied to the chart. So we have seen how we can attach the bollinger
bands indicators on the charts. So, now the bollinger bands indicator formula. We have already discussed that upper bollinger
bands is middle bands plus 2 standard diviation and lower band is middle band minus 2 standard
diviation. So the formula of the bollinger bands is given
here and now how to trade how will you use the bollinger bands. Bollinger bands is actually use as a support
or resistance level. So bollinger bands use as support and resistance
level. So price tends to bounce from the bollinger
bands. So whenever price will hit one bollinger band,
it will tend to bounce from there. SO it acts as a support and resistance that
is number one. And number two you can also create bullish
and bearish position using the bollinger band. So the thumb rule is simple you need to buy
at the lower bollinger band sell at the middle bollinger band or the upper bollinger band. So you can also book profit in two parts. You can book some profit here and you can
book rest profit here. And if you create a sell position or a short
sell position you need to book some profit here and rest at the lower bollinger bands. So bollinger bands will actually give you
the market cycle, buy, sell, buy, sell, buy, sell, buy and so on. So you can get a idea that whether the market
is reaching an extreme or not, whether the market is overbought or whether the market
is oversold. So in this way you can use the bollinger bands. so now here in this chart you use the same
theory buy at the lower bollinger bands so the buy position is created and sell at the
upper bollinger band, sell, buy, sell, buy, and so on. So you can understand that you can create
short or long positions using the bollinger bands. So bollinger bands you can see in the live
example. Sometimes, you will see the bollinger bands
are narrow and sometimes you will see the bollinger bands are widening. Suppose here, the bollinger band is narrow
but here the bollinger band is widening. Here the bollinger band is extreme narrow
but here the bollinger bands are widening. So whenever the bollinger band becomes narrow,
it is called bollinger bands squeeze. So bollinger band, whenever the bollinger
band becomes narrow it indicates that the volatility in the market is very low. And the prolonged period of narrow bollinger
bands condition can trigger a breakout or breakdown in the market. So if you are seeing that bollinger bands
are narrow for a long time, you can anticipate that something big can happen. So you can not anticipate which way the market
will move but something is going to happen you can understand and whenever the moves
starts you can enter with a some trend following system. So that is how you can use the bollinger bands. So we have already discussed the formula,
the basic FAQ of Bollinger band. Now let us see few thumb rules of trading
in the bollinger bands. So, sometimes bollinger bands actually become
tighten, as we call it bollinger bands squeeze or sometimes bollinger bands widen. If prices moves outside the bands, we can
expect that the price will continue in that direction. But for that, we will suggests you look for
atleast two closes outside the bands, atleast two closes outside the bands. If bottoms and tops are made outside of the
band, followed by bottoms and tops inside the bands, price reversal is imminent. That means previously the bottom and top made
outside the band, and now the next bottom or top made inside the band, you can expect
that the price will reverse. And you can use this bollinger bands as project
price target. So either the middle band can be a target
or the lower band can be the target or the upper band can be the target as per your position. Whenever you are in the buy position you can
target the middle band or the upper band, and whenever you are in the sell position
you can target the middle band or lower band. So we have already seen how to set up the
charts. In this blog post I have also discussed John
Bollinger’s 22 Rules for using Bollinger Bands. So John Bollinger is the man who has invented
this indicator, so he has described his 22 rules for using Bollinger Bands. So you can actually study what John Bollinger
has told for using the Bollinger Bands. So there are the rules has been given. I am not discussing the rules over here. Now the Bollinger Bands trading strategy. So the first strategy you can use multiple
bands. So you can use multiple bands in creating
a multiple bands structure. You can create the first bollinger bands 20,1.5
instead of two you can create 21.5. Second bollinger band 22, third bollinger
band 22.5. SO you can give different colors to the bollinger
bands. so fourth bollinger bands you can create 23,
fifth bollinger bands you can create 23.5, and sixth bollinger bands you can create 24. So you can create multiple bollinger bands. And I have written a E-book on these multiple
bollinger bands strategies. So there is, this is how the structure will
look like, how the system will look like. And you can download the bollinger bands ebook,
pdf from here. So you can come down to the blog post and
you can download from here. This is the download link. You need to just share it in your facebook. So thats all. So there is nothing much if you share it. The download link will be opened automatically. That’s why I am not discussing these strategies
over here. It is given in the pdf ebook. Now the second strategy, we have already seen
one strategy that you can buy at the lower bollinger band ans sell at the upper bollinger
band. Buy at the lower bollinger band and sell at
the upper bollinger band. But for taking a reverse position, you need
to wait for a reversal candle. Suppose here, price is touching the lower
bollinger band, you are getting a reversal candle. You are getting a reversal candle and you
can enter the trade, you can see that price has reached the upper bollinger band. But whenever price has reached the upper bollinger
band, you are not getting any reversal candle. Infact you are seeing that the bollinger band
has pierced ourside the band. So one close, two close that means price will
move in the same direction unless and untill you are getting a reversal candle. So here you got a reversal candle, price has
moved to the lower bollinger band. One again you have got a reversal candle,
price has moved to the upper bollinger band and so on. So you can create long and short positions
using the bollinger bands alone. I will suggest you can also use some oscillators
to mix and match between the bollinger bands, for this I will suggest to use Stochastics. So stochastics and bollinger bands, you can
see how the stochastics and bollinger bands combo actually describe the market cycle. Up, down, up, down, up and so on. Here also, down, up, down, up and so on. So you can understand how you can use, using
the stochastics and bollinger bands. You can get always the idea where the market
is going or where the market will go from the stochastic bollinger bands combo. Now using the bolliner bands squeeze. So bolinger band squeeze already I have told
that you can use the bollinger bands squeeze for an entry and exit. Suppose, let us go to graphing chart, let
us go to graphing 5 minutes chart. So you can see price squeezes. This is a perfect squeeze. You are getting a squeeze. And after the squeeze you need to follow in
which way that the market is breaking up or breaking down. Suppose here, the market has broken down so
you can follow the trend. So you can see after a squeeze you have got
a perfect entry on the short side. So if you get another squeeze, suppose here,
you have got a squeeze. After the squeeze price has broken up, so
you have got few candles on the upside. So you can make money from the squeeze. So first you need to look out for a squeeze
and then for a breakout or a breakdown. So more long the squeeze is more chance that
the price will move on the breakout or breakdown direction. Suppose, here you got a squeeze, we are getting
a up down up down kind of pattern and finally we have got two closes outide the band. We have got two closes outside the band. So these two closes you can see that the price
has actually rallied a lot. So you can make good amount of money from
squeeze or the subsequent rally or the subsequent fall. So now if you are using amibroker, I have
given a formula, amibroker formula to use the bollinger bands squeeze. So this amibroker formula will actually point
out where the bollinger bands squeeze is happening. So this is how actually the bollinger bands
squeeze happens. So this is a squeeze and then a breakdown. So this is how my amibroker formula will look
like. This formula will always try to find a squeeze. The yellow marks will be the squeeze. So you can identify the bollinger band squeeze
and you can actually trade the breakout or breakdown direction. Now there is a head fake. Another strategy is called head fake. Head fake is a counter trade strategy. So after the bollinger bands squeeze sometimes
a reversal bar happens. Suppose a breakout or breakdown happens and
then after the breakout or breakdown bar you are not getting a continuation pattern. You are not getting a continuation pattern
rather you are getting a opposite color bar after a breakout or breakdown. So that is another opportunity to trade on
the other direction. I will show you in the Zerodha kite platform,
Suppose this was a nice squeeze. After the squeeze suddenly we got a breakout
bar. And in the next bar we got a reversal bar. So that is a head fake. Squeeze breakout bar and then reversal bar. And you can see price has come down from there. So this is how you can use the squeeze and
head fakes. So you can visit this blog post and you can
get all the ideas on Bollinger Bands trading. So I have also suggested a book on Bollinger
Bands and that is Bible of Bollinger Bands, that is Bollinger on Bollinger Bands. That is what John Bollinger has said about
the bollinger bands. So you will also get the amazon link from
here. So you can purchase the book and you can read
about bollinger bands and you can become a master on Bollinger Bands. So friends, I have completed the webiner on
the Bollinger Bands. So if you like the video do not forget to
hit the like button and please also share it with your friends because if you share
someone else also be benefited from this strategy from this indicator. So just once again I will tell you if you
wish you can subscribe to my youtube channel. If you subscribe you can get video updates
instantly. You can whatsapp me to join my team. To join me in whatsapp simply send me your
name, phone number, and email id to +91-9674321856. So friends, thanks a lot for watching this
webiner, till then I wish lots of luck in the coming days, bye.

One Reply to “Bollinger Bands Indicator Explained for Making Profit in Share Market”

Leave a Reply

Your email address will not be published. Required fields are marked *