Bollinger Bands in trading terminal


Moving averages are procyclical indicators that follow the trend: As long as the market is trading above its recent average, an upward trend is present in the broadest sense. The Bollinger Bands developed by the analyst John Bollinger offer an orientation mark that also takes into account the current market volatility.

Most charting software includes simple percentage bands. A percentage band surrounds a moving average and is placed, for example, 3 % above the average and 3 % below the average. The simple interpretation: If the market approaches the upper percentage band, this is considered an overbought situation; if prices are close to the lower percentage band, on the other hand, there may be an oversold situation.

90 % of prices move within the Bollinger Bands

Percentage bands are very static and do not take into account the current dynamics of the market. Bollinger bands are placed two standard deviations above and below the moving average respectively. This results in 95% of prices moving within the two bands.

In dynamic uptrends, the price usually moves between the moving average and the upper band. The situation is similar with downward trends.

In the relevant literature, both procyclical and anti-cyclical views can be found with regard to the interpretation of Bollinger bands. Many analysts believe that prices in the area of the upper band are suitable for opening a short-term position against the prevailing trend.

The bands can also serve as a dynamic price target. If the market bounces off the upper band and falls below the moving average in the course of the subsequent downward movement, the lower band can serve as a target.

traders day work

The Moving Average Convergence/Divergence, MACD for short

here is good explanation by thai traders: "MACD เป็นหนึ่งในตัวบ่งชี้ทางเทคนิคที่รู้จักกันดีใน ดาวน์โหลด metatrader 4 และรวมอยู่ในซอฟต์แวร์การซื้อขายที่เกี่ยวข้องทั้งหมด. ตัวบ่งชี้ขึ้นอยู่กับแนวคิดของการย้ายค่าเฉลี่ย."
"The MACD is one of the best-known technical indicators and is included in all relevant trading software. The indicator is based on the concept of moving averages."

Graphically, the MACD appears as a combination of lines. The first line is the MACD line. It is understood as the difference between two exponentially weighted moving averages with different period lengths. In the default settings of most charting programmes, 12 and 26 days are used.

The second line is an exponentially smoothed average of the MACD line. The standard settings usually provide for an average with a length of nine periods. The second line is also called the signal line and is slower than the MACD line.

Interpretation of the MACD

The interpretation is very simple. If the faster line crosses the slower line from bottom to top, a buy signal is present. Conversely, a sell signal is generated when the faster line crosses the slower line from top to bottom.

At first glance, therefore, the MACD is no different from very simple indicators with two or more moving averages.

The MACD runs on a value scale of (mostly) 60 to -60 and is thus also an oscillator. The interpretation is also very similar: if the two lines run far into negative territory, an oversold situation is assumed. Conversely, high values indicate an overbought situation.