Trading is neither an exact science nor art. It is a mixture of both. There are scores of publicly available indicators and each claims to be the best. However, none of them are perfect or designed to be used in isolation.
One of the more popular indicators widely used by several traders is Bollinger Bands, an indicator that can be used to spot price peaks, lows, and opportunities for shorting during exhausted rallies and buying during sharp pullbacks.
Let’s learn three simple methods to use this indicator in trading.
What are Bollinger Bands?
John Bollinger created and copyrighted the Bollinger Bands in the 1980s. The indicator consists of a middle band, which is a simple moving average whose default is set at 20-periods and two outer bands set at two standard deviations below and above the middle band.
BTC/USDT daily chart. Source: TradingView
Its most basic use is to identify whether the price is high or low on a relative basis. If the