BOLL Value
BOLL indicator is a technical analysis indicator based on moving average lines. It uses the middle line, upper line, and lower line to display the pressure zone and support zone of the stock price, thereby helping investors judge the trend direction of the stock price.
Definition:
The BOLL indicator (Bollinger Bands) is a technical analysis tool based on moving averages. It consists of three lines: the middle band (usually a 20-day moving average), the upper band, and the lower band. The upper and lower bands are calculated by adding and subtracting a certain multiple of the standard deviation from the middle band. The BOLL indicator helps investors determine the direction of stock price movements by showing the pressure and support zones of the stock price.
Origin:
The BOLL indicator was introduced by John Bollinger in the early 1980s. Bollinger discovered that the price fluctuation range could be measured using the standard deviation in statistics, leading to the concept of Bollinger Bands.
Categories and Characteristics:
1. Middle Band: Usually a 20-day moving average, reflecting the average level of stock prices over a period.
2. Upper Band: The middle band plus two standard deviations, indicating the pressure zone of the stock price.
3. Lower Band: The middle band minus two standard deviations, indicating the support zone of the stock price.
Characteristics: The BOLL indicator dynamically reflects market volatility. When market volatility increases, the bands widen; when market volatility decreases, the bands narrow.
Specific Cases:
1. Case 1: The price of a stock continues to rise over a period and gradually approaches the upper band. Investors may consider that the stock price is facing pressure and may experience a pullback.
2. Case 2: The price of a stock continues to fall over a period and gradually approaches the lower band. Investors may consider that the stock price is finding support and may rebound.
Common Questions:
1. How to set the parameters of the BOLL indicator? The default parameters are usually a 20-day moving average and two standard deviations, but investors can adjust them according to their trading strategies.
2. Is the BOLL indicator applicable to all markets? The BOLL indicator is applicable to most financial markets, but its effectiveness may be limited in markets with extremely low or high volatility.
