Bollinger bands explained simply and understandably. / Tutorial trading strategy indicator beginners


Bollinger bands explained simply and understandably. / Tutorial trading strategy indicator beginners day secrets video chart patterns youtube stocks settings john swing daily chart rsi stochastics macd technical scalping basics how to use david moadel you a brief introduction to Bollinger
Bands so here we go Bollinger Bands were invented by market
technician John Bollinger in the 1980s they are a popular indicator that helps
traders to determine possible buy and sell points as well as when a stock
might make a big move soon in order to understand Bollinger Bands first we need
to take a quick look at standard deviations don’t worry it’s simple a
standard deviation is just a measure of how far away a stock’s price is from its
average or typical price one standard deviation is a little bit
higher or lower than the average or typical stock price and this happens
frequently two standard deviations means a lot higher or lower than the average
or typical stock price and this happens occasionally three standard deviations
is a whole lot higher or lower than the average or typical stock price and this
happens rarely but it does happen in a normal distribution a stock’s price will
stay within one standard deviation sixty-eight point two percent of the
time alright so if this is the average price of a stock all right it might go
one standard deviation lower or one standard deviation higher but it’ll stay
within one standard deviation of the mean or average about sixty eight point
two percent of the time it will stay within two standard
deviations 95.5% at the time all right so here’s
the mean or average price of the stock and here’s here’s if it goes down to
standard deviations the stock price and here’s if the stock price goes up to
standard deviations and it’ll stay within two standard deviations almost
all the time ninety-five point five percent of the
time and the stock’s price will stay within three standard deviations
ninety-nine point seven percent of the time so if this is the average stock
price way out here is if it goes down the stock price goes down three standard
deviations and way over here is if it goes up three standard deviations all
right and ninety-nine point seven percent of the time
the stock’s price will stay within three standard deviations so that’s what
standard deviations mean now this is a picture of a daily candlestick chart so
each one of these candlesticks represents one day of price action and I
made a separate video if you look through my old videos on how to read
candlestick charts so this is a daily candlestick chart each candlestick
represents one day of price action for a stock now the three blue lines one blue
line here’s one and here’s one the three blue lines two solid lines and one
dotted line in the middle are the three Bollinger Bands alright so you have your
lower band upper band and the mid line and we’re going to talk about that the
mid line which is the dotted blue line is just the 20-day simple moving average
that’s all it is so it’s just the the average the mean of
the last 20 days of price action the last 20 daily candlesticks
so the mid line represents the average price of the stock or at least the
average for the last most recent 20 trading days
we talked about how standard deviations represent how far away the stocks prices
from its average or typical price the upper and lower solid Bollinger Bands
show this the upper Bollinger Band which is the
solid blue line on top is two standard deviations above the average stock price
which is represented by the dotted line alright so this is the 20-day simple
moving average we can call that the average stock price for the last 20
trading days and the upper band here represents two standard deviations above
that price the lower Bollinger Band which is the solid blue line on the
bottom is two standard deviations below the average stock price which is the
dotted line if the stock market were truly a normal distribution then a
stock’s price would stay within the upper and lower Bollinger Bands
ninety-five point five percent of the time because remember it’s two standard
deviations above and below the mean here or average
but realistically speaking the stock market is not normal or rational in its
behavior but a stock’s price should should be expected to stay within the
bands around 90% of the time and if you look at the candlesticks
that’s that seems to play out that way it does stay within the bands most of
the time but not all the time since the stock’s price is usually
contained within the upper and lower bands we can say about 90% of the time
some traders will buy a stock when it touches the lower band and then sell the
stock when it touches the upper band which kind of makes sense if it stays
within the bands most of the time you can buy at the lower band and sell at
the upper band and you can just kind of rinse and repeat that over and over buy
here sell here buy here sell here but please note that this method is not
100% reliable and stock prices can often break right through the bands oftentimes
the method works better with less volatile stocks that makes sense because
less volatile stocks stocks that don’t make huge moves as much are more likely
to remain contained within the bands all right but even less volatile stocks can
just bust right through the bands either to the upside or the downside and just
keep going for example in earnings reports can cause a candlestick to just
shoot right through the bands could just break right through it so don’t count on
this a hundred percent of the time sometimes the upper and lower Bollinger
Bands will squeeze or contract they’ll come very close together like we see in
the middle of this chart okay we can see right around here the band started
started to squeeze together and they remained squeezed for well if each one
of these is one trading day this is several weeks it remained in a squeezed
State here when the upper and lower bands have been
squeezed together for a while this means that volatility is low but it
won’t stay low forever at least I can’t think of any stock that stays you know
that that has very low volatility forever
at some points volatility is going to pick up most likely therefore we might
expect volatility to increase soon after you know after it’s been squeezed for a
while and a big move might happen in the near future now again that’s might okay
could happen okay there’s no there no guarantees here in the stock market the
big move could be to the upside like this one or the downside in this chart
the buildup of squeezed tension was finally released and in this case the
big move was to the upside since it’s difficult to know whether the
big move will be a breakout to the upside or a breakdown to the downside
some options traders will buy a straddle or a strangle in this chart because the
move prior to the squeeze here okay the squeeze is here and the move prior to it
was an up move it made sense at least in hindsight that the move after the
squeeze would likely be another up move again that’s not totally reliable but
that is something to think about once again this method is not 100%
reliable since Bollinger Bands squeezes can last for a very long time before any
breakouts or breakdown occurs in the final analysis the best method is to use
your own judgement and possibly combine Bollinger Bands with other indicators
for example RSI MACD whatever you like all right here’s an example and I got
this chart from stockcharts.com wanted to give them credit this is a daily
candlestick chart for Home Depot stock and we can see the squeeze here okay the
and this was for several weeks the squeeze just built and built and built
and finally it was released in this case to the upside with a big big breakout
here alright and notice that the the standard settings and if you go on
stockcharts.com the standard steadying standard settings for a daily
candlestick chart will be a 20 period meaning it’ll you know the midline will
be the simple moving average for the previous 20 closing prices for the for
the past 20 periods or candlesticks and two standard deviations below to to the
you know to above the midline and two standard deviations below the midline
alright so 20 and 2 is standard but you can adjust these
you can use Bollinger Bands on practically any timeframe not just daily
charts and this is from Google Finance this chart here we see a two-minute
candlestick chart for Microsoft stock okay so each candlestick here represents
two minutes of price action so this might be a good chart for day traders
note how the Bollinger Bands squeeze on the right side this is a long squeeze
here ends with a breakdown okay so we can see a squeeze here and then a break
down it broke to the downside here when the squeeze tension was finally released
here’s another squeeze here which broke to the upside but this just goes to show
that you know squeezes don’t all Bollinger Band squeezes don’t always end
with a breakout sometimes it can end with a breakdown all right so that was
an introduction to Bollinger Bands of course there’s much more to learn about
them but I hope this introduction at least gave you a starting point so if
you like this video yeah please give this video a thumbs up
leave comments and please subscribe to my youtube channel so you can receive
the latest updates on my financial educational content and if you’d like to
put together a trading plan or an investing plan or if you have questions
about technical indicators or picking stocks or options or whatever you can
email me anytime my name is David Modell and my email address is David Modell at
gmail.com thank you so much for watching and listening and I’ll talk to you again
soon thank you for watching please like
comment and subscribe and I’ll see you next time

100 thoughts on “Bollinger bands explained simply and understandably. / Tutorial trading strategy indicator beginners”

  1. Thanks for the effort and time. It was pretty clear to me too 😉 (i'm not a n00b) Only 1 question why the nice lady in the thumbnail and the ugly guy at the end? NO, i'm joking/trolling. Thx again and keep up the good work with the combination of speaking and writing. It helps me a lot to understand if i don't understand the pronouncing of words. Greetings from the Netherlands and be sweet!

  2. Hello David, and thank you for the video.
    I have a question. After that 60 and something % period that the pair stays between the bands, what do you think, should i put a take profit? And a stop loss, how could it be positioned there? Thank you very much!!

  3. Hi David,its amazing ,very well explained,i wish you can teach me more indicators and strategies in forex.

  4. David, this is an absolutely phenomenal tutorial. Your instructions are clear and easy to follow. Absolutely LOVE your instructions, as a beginner in stock trading.

  5. Good vide..better than a couple others i have seen..Made sense to me as a new stock investor. North Texas May 18 2018

  6. Thanks for the videos! They are very helpful. Problem with BB though, they are dynamic. It's hard to stay with the price targets.

  7. ur teachings on technical anaylisis is superb.A novice could easily understand your tutorials very easily

  8. i like your video and your explanation sir,,kindly could you told me when this theory of bolinger bands using as scalping trade?can u explain how and what time frame to use scalping for great result.thanks

  9. Wonderful service, I cannot deny I was very skeptical at first after I have been scammed online by the brokers but these guys helped me a lot and I got back my full credit card debt and a part of my wire transfer which sum up to over $150,000. I didn’t even think this is possible at first but dreams came true I guess and I am still shocked it worked out this way. I am so happy I was approached by them!

  10. Mr David. Your voice, language and illustrations are as perfect as the bollinger bands range which is 95.5%! I am in love with bollinger bands and of course with your thumb nail 🔥 .
    I wish you do some videos which can help school kids with maths or grammars etc and make their lives easier.
    You have rare gifted talents. Have you thought about it?

  11. Im new in trading industry and im glad I was able to watch this video. at least now I have indicator that make sense to me. Thank you sir..

  12. Thank you very much for a clear and comprehensive lesson on Bollinger Bands. I'm still in school and just starting out in Forex. I really need someone who explains it well like you do. Great job! Hoping for more awesome videos like this one (with catchy thumbnails..lol)

  13. great teacher. I been watching trade videos as a newbie since Dec and this guy teaches very slowly for everyone to understand. Two thumbs up!

  14. This the most simplest explanation I have come across about Bollinger bands. Thanks so much for for the contents.

  15. Hello am pleased to meet another student of Mr Andrew, I recently ventured into investing with him undertaking trades on my behalf, he's been of great help, and his tutelage has brought me to a higher understanding of profit generation. contact him today. andlewis86 @ yahoo. com.

  16. Thank you for this excellent video tutorial, David. I just started learning about trading strategies and appreciate your clear explanation for a novice like me.

  17. Just the right amount of explaination. Nice easy pace, and you sir are a Teacher!! I learn more watching your videos than I do with all the other so called gurus. I knew about bolinger bands, but I did not know what they were or how they were set up. Thanks so much for the video David.

  18. David your teaching presentations are excellent. I have learned so much from you. I was losing in my trading, but after watching some of your teaching videos I have been very successful. Thank you again.

  19. Professional explanation. I am 80%+ deaf and understood every word by reading the text on the board and the moving text at the bottom. While I suffer much when watching iq Option training videos, which should be white otherwise, it hearts our vision. Many thanks to you Mr. D. Moadel.

  20. i have done very well using Bollinger bands as part of my technical analysis.  It's not 100% fool proof, but nothing is.  This is a great tool, but that doesn't mean you follow it blindly, you still need to really pay attention to the market.

  21. You should have a party and invite all the models from your thumbnails. Now that is a gala I would like to attend.

  22. This is helping me get into the crypto trading scene, you explain it in a simple to understand manner, thank you David!

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