Bollinger Bands ® are among the most reliable and potent trading indicators traders can choose from. They can be used to read the trend strength, to time entries during range markets and to find potential market tops.

Are Bollinger Bands useful?

Bollinger Bands® are a trading tool used to determine entry and exit points for a trade. The bands are often used to determine overbought and oversold conditions. Using only the bands to trade is a risky strategy since the indicator focuses on price and volatility, while ignoring a lot of other relevant information.

Which indicator works best with Bollinger Bands?

Using the %b Indicator

Another indicator used with Bollinger Bands is %b, which plots the stock's closing price as a percentage of the upper and lower bands. The upper band is identified as 1.0, the middle band 0.5 and the lower band zero. Thus, %b shows how close the stock's current price is to the bands.