We are what we think; all that we are, arises with our thoughts; with our thoughts, we make the world.

Bollinger BandsBollinger bands are used to measure a market’s volatility.  Basically, this little tool tells us whether the market is quiet or whether the market is LOUD!  When the market is quiet, the bands contract; and when the market is LOUD, the bands expand. Notice on the chart below that when the price was quiet, the bands were close together, but when the price moved up, the bands spread apart. 

One thing you should know about Bollinger Bands is that price tends to return to the middle of the bands. That is the whole idea behind the Bollinger bounce.

The reason these bounces occur is because Bollinger Bands act like mini support and resistance levels. The longer the time frame you are in, the stronger these bands are.  Many traders have developed systems that thrive on these bounces, and this strategy is best used when the market is ranging and there is no clear trend.

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