InvestorQ : What is meant by Bollinger bands and how do these Bollinger bands help intraday traders take a view on the stock or the market?
Anu Biswas made post

What is meant by Bollinger bands and how do these Bollinger bands help intraday traders take a view on the stock or the market?

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Aashna Tripathi answered.
2 years ago
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Bollinger bands not only allow us to track shift in direction but also enable the identification of overbought and oversold zones on the stock or the market as a whole. The Bollinger is a slight expansion of the concept of moving averages. The DMA only captures the mean values of the prices. It does not compare the stock based on volatility of the stock. Volatility is very important for an intraday trader for two reasons. Firstly, it explains the extent of risk in the trade for the intraday trader. Normally, higher the volatility higher is the risk for the trader and that impacts the choice of stop loss and also the choice of profit target. Secondly, Bollinger Bands use range as a measure of standard deviation which enables to define the trading range in a more granular fashion.

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