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Analysis and Insight
192
Click [Exit] to close the Technical Analysis screen.
7.8.1
Price Studies
7.8.1.1
Bollinger Bands
Bollinger Bands are price study type technical trading tool created in the 1980's by John Bollinger.
They arose from the need for adaptive trading bands and the observation that volatility was dynamic,
not static as was widely believed at the time.
The purpose of Bollinger Bands is to provide a relative definition of high and low, as shown by the
upper and lower bands.
The use of Bollinger bands can aid in pattern recognition and in comparing price action and indicator
action to arrive at trading decisions.
Bollinger Bands consist of a set of curves drawn in relation to share prices. The curves represent a
measure of the intermediate-term trend (a simple moving average), which in turn serves as the base
for an upper and lower band.
The interval between the upper and lower bands and the middle band is determined by volatility,
calculated as the standard deviation of the same data that were used for the average.
Bollinger Bands – parameters and customisation in MySF Manager
Number of periods to use in calculating middle band (moving average)
Number of standard deviations to use for upper and lower bands
Value to use as basis for calculation (open, low, high, close, adjusted close)
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