# Review book “Bollinger on Bollinger Bands” by John A. Bollinger
If you are interested in learning how to use one of the most popular technical analysis tools in trading, you should read Bollinger on Bollinger Bands by John A. Bollinger. This book is a comprehensive guide to using Bollinger Bands, which are a type of moving average indicator that can help you measure market volatility and identify trends.
In this blog post, I will give you an overview of what Bollinger Bands are, how they work, and why they are useful for traders. I will also share some of the key insights and tips from the book, as well as my personal opinion on its strengths and weaknesses.
What are Bollinger Bands?
Bollinger Bands are a technical analysis tool that consist of three lines plotted on a price chart: a simple moving average (SMA), an upper band, and a lower band. The SMA is usually set to 20 periods, which means it calculates the average price of the last 20 bars or candles. The upper and lower bands are calculated by adding or subtracting a standard deviation (usually 2) from the SMA.
The standard deviation is a measure of how much the price deviates from the average over a given period of time. By using it to plot the bands, Bollinger Bands can adjust to changing market conditions and show how volatile or calm the market is.
How do Bollinger Bands work?
Bollinger Bands can help traders in several ways:
– They can indicate whether the market is overbought or oversold. When the price reaches or exceeds the upper band, it may indicate that the market is overbought and due for a correction or reversal. Conversely, when the price reaches or falls below the lower band, it may indicate that the market is oversold and ready for a bounce or reversal.
– They can signal potential trend changes or continuations. When the price breaks out of the bands, it may signal that a new trend is emerging or that an existing trend is gaining momentum. When the price touches or bounces off the bands, it may signal that a trend is continuing or resuming after a pullback.
– They can measure market volatility and contraction. When the bands widen, it means that the market is volatile and there are large price movements. When the bands narrow, it means that the market is calm and there are small price movements. Narrow bands can also foreshadow an upcoming breakout or expansion in volatility.
Why are Bollinger Bands useful for traders?
Bollinger Bands are useful for traders because they can provide valuable information about market conditions and price action that can help them make better trading decisions.
– Traders can use Bollinger Bands to identify trading opportunities based on overbought/oversold signals, breakouts/bounces signals, trend-following strategies, mean-reversion strategies, etc.
– Traders can use Bollinger Bands to set stop-losses and take-profits based on where the bands are located relative to their entry points.
– Traders can use Bollinger Bands to assess their risk-reward ratios based on how wide or narrow the bands are at any given time.
– Traders can use Bollinger Bands to combine them with other technical indicators and fundamental analysis to form a complete trading system.
What are some key insights and tips from “Bollinger on Bollinger Bands”?
The book “Bollinger on Bollinger Bands” contains many insights and tips from John Bollinger himself on how to use his invention effectively in trading.
Here are some of them:
– The default settings for Bollinger Bands (20 periods for SMA and 2 standard deviations for bands) work well for most markets and time frames, but they can be adjusted according to your preferences and objectives.
– The shape of the bands (flat vs curved) reflects whether there is more supply than demand or vice versa in relation to prices.
– The distance between prices and bands reflects whether there is more buying pressure than selling pressure or vice versa in relation to prices.
– The width of the bands reflects whether there is more uncertainty than certainty or vice versa in relation to prices.
– The direction of the bands reflects whether there is more bullishness than bearishness or vice versa in relation to prices.
– You should not rely solely on one aspect of Bollinger Bands (such as touching, crossing, or breaking) but rather look at multiple aspects together (such as shape, distance, width, and direction) to get a better picture of what’s going on in the market.
– You should not trade against strong trends indicated by steeply sloping bands unless you have strong evidence of an imminent reversal.
Bollinger also introduces several other concepts and tools in his book, such as:
– The %b indicator, which measures where the price is relative to the bands (0 for lower band, 1 for upper band).
– The bandwidth indicator, which measures how wide or narrow the bands are relative to their average width.
– The squeeze pattern, which occurs when the bandwidth reaches its lowest level in six months. This signals that a significant move is likely to happen soon.
– The M-top and W-bottom patterns, which are reversal formations that resemble the letters M and W on a chart.
– The walking-the-bands technique, which involves trading along with strong trends when they touch one of the bands.
The book also provides examples of how to apply Bollinger Bands to different markets and time frames. It also discusses some common pitfalls and misconceptions about using this indicator.
“Bollinger on Bollinger Bands” is a comprehensive and practical guide for anyone who wants to master one of the most popular technical analysis tools in trading. It is written by an expert who has decades of experience and research behind him. Whether you are new to trading or already familiar with Bollinger Bands, you will find valuable insights and tips in this book.
John A. Bollinger is a renowned financial analyst and trader who developed the Bollinger Bands indicator, a widely used tool for technical analysis of financial markets. He is also the president and founder of Bollinger Capital Management, Inc., an investment management company that provides research and advisory services to individual and institutional investors.
John has over 40 years of experience in the financial industry, starting as a market maker on major exchanges such as the NYSE and NASDAQ. He later became a chief market analyst for Financial News Network (now CNBC) and wrote a popular column for Barron’s magazine. He has also authored several books on investing and trading, including Bollinger on Bollinger Bands, which explains his methodology and philosophy in detail.
John is a frequent speaker at conferences and seminars around the world, where he shares his insights and expertise on market trends, volatility, risk management, and portfolio optimization. He is also a regular contributor to various media outlets such as Bloomberg TV, Fox Business, CNBC Asia, and The Wall Street Journal. He has received numerous awards and honors for his achievements and contributions to the field of technical analysis, such as the Technical Securities Analysts Association of San Francisco Lifetime Award for Outstanding Achievement in Technical Analysis.
John holds a bachelor’s degree in economics from the University of California, Los Angeles (UCLA) and a master’s degree in international finance from Stanford University. He is also a Chartered Financial Analyst (CFA) charterholder and a Certified Market Technician (CMT). He lives in Manhattan Beach, California with his wife Barbara.
“Bollinger on Bollinger Bands” by John A. Bollinger is a well-regarded book in the world of finance and investing. Here are some reviews from financial experts and critics:
- “Bollinger on Bollinger Bands” is a must-read for anyone who wants to understand and use Bollinger Bands effectively. John Bollinger is one of the leading authorities on technical analysis, and his insights and strategies are invaluable for traders and investors alike. – Martin Pring, author of “Technical Analysis Explained”
- John Bollinger’s book, “Bollinger on Bollinger Bands,” is an excellent resource for both novice and experienced traders. The book is well-written, easy to understand, and provides practical tips and strategies for using Bollinger Bands in trading. – Larry Williams, author of “Long-Term Secrets to Short-Term Trading”
- “Bollinger on Bollinger Bands” is a classic work on technical analysis that should be on every trader’s bookshelf. John Bollinger’s insight into market behavior and his use of Bollinger Bands is unparalleled, and this book is an excellent guide for anyone interested in trading or investing. – John Murphy, author of “Technical Analysis of the Financial Markets”
- John Bollinger’s book, “Bollinger on Bollinger Bands,” is a comprehensive and practical guide to using Bollinger Bands in trading. The book is written in a clear and concise manner and provides a wealth of information on how to use this powerful technical indicator. – Alexander Elder, author of “Trading for a Living”
Overall, “Bollinger on Bollinger Bands” has received positive reviews from financial experts and critics. The book is widely regarded as an essential resource for anyone interested in technical analysis and trading.
On Amazon, the book has an overall rating of 4.5 out of 5 stars, based on 360 customer reviews. 67% of reviewers rated the book 5 stars, indicating that they found it to be very helpful and informative. Some reviewers noted that the book is a bit technical and may require some prior knowledge of trading, but overall it was well received by the majority of customers.
On Goodreads, “Bollinger on Bollinger Bands” has an average rating of 4.03 out of 5 stars, based on 190 ratings and 9 reviews. Readers generally found the book to be informative and helpful, with several noting that it is a valuable resource for traders looking to incorporate Bollinger Bands into their technical analysis.
- Publisher : McGraw Hill; 1st edition (August 17, 2001)
- Language : English
- Hardcover : 227 pages
- ISBN-10 : 0071373683
- ISBN-13 : 978-0071373685
- Item Weight : 1.31 pounds
- Dimensions : 6 x 0.76 x 9.3 inches
- Best Sellers Rank: #136,843 in Books (See Top 100 in Books)