We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides Download
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • US Dollar Price Analysis: USD Snaps Back, Will Buyers Bid Support? https://www.dailyfx.com/forex/fundamental/article/drivers_of_price_action/2020/02/27/US-Dollar-Price-Analysis-USD-Snaps-Back-Will-Buyers-Bid-Support-JS.html $USD https://t.co/f5eGGnH23P
  • Tune in to @PeterHanksFX 's #webinar at 11:00 AM ET/4:00 PM GMT to learn how to identify trends with trader #sentiment. Register here: https://t.co/MqVMi2INbJ https://t.co/ABeHjpwszw
  • 🇺🇸 USD Pending Home Sales (YoY) (JAN), Actual: 6.7% Expected: 2.1% Previous: 6.8% https://www.dailyfx.com/economic-calendar#2020-02-27
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.93%, while traders in USD/CAD are at opposite extremes with 67.08%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/hLfhItcNTG
  • Commodities Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Gold: 0.95% Silver: 0.57% Oil - US Crude: -4.95% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/8tSEvwOXf7
  • Heads Up:🇺🇸 USD Pending Home Sales (YoY) (JAN) due at 15:00 GMT (15min), Actual: N/A Expected: N/A Previous: 6.8% https://www.dailyfx.com/economic-calendar#2020-02-27
  • $SPX gaps lower on the US session open, now over 10% off of highs https://t.co/njDc20ZY9x
  • $EURUSD: When sellers went on the attack in early-February, support could hold no longer, and bears punched through that zone as if it didn’t exist on the way down to fresh two-year-lows. Get your EUR/USD technical analysis from @JStanleyFX here: https://t.co/PCuM2tKVop https://t.co/WmImeDvH0A
  • Today, I was hosted by @skynewsarabia to discuss #Coronavirus repercussions on global economy and Financial markets. #Gold, #USD, #StockMarket , #10yearsyield More details in the link below: https://t.co/IHrMADPJhK https://t.co/UeNIGnGveb
  • Indices Update: As of 14:00, these are your best and worst performers based on the London trading schedule: Wall Street: -1.81% US 500: -1.96% Germany 30: -3.50% France 40: -3.75% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/vXmS9iTBem
John Bollinger on Bollinger Bands®: Key FX Trading Tools

John Bollinger on Bollinger Bands®: Key FX Trading Tools

2019-10-24 20:30:00
Richard Snow, Markets Writer
John Bollinger

Bollinger Bands are a technical trading tool that can be applied in all financial markets, including equities, forex, commodities and futures. In this article, John Bollinger provides his own insight into Bollinger Bands, their lasting relevancy and their application in the current retail trading industry.

John Bollinger’s main talking points:

  • An introduction to Bollinger Bands
  • Key tools for forex traders
  • A surprising discovery: Using Bollinger Bands to find new opportunities
  • Why are Bollinger Bands more popular than ever?
  • Enduring power and relevance

Introduction to Bollinger Bands

Bollinger Bands can be applied across all financial markets and used in most timeframes, from very short-term periods to hourly, daily, weekly or monthly. The only requirement is that there be sufficient liquidity to see the price-formation mechanism at work in each bar. While broadly applicable, Bollinger Bands are particularly effective in forex trading.

Read our complete guide to Bollinger Bands® and forex.

Key tools for forex traders

Why are Bollinger Bands and forex such a good combo? Because forex is a form of pairs trading, each transaction involving a long position in one currency and a short position in another. For example, 'cable' involves being long the British pound and short the US dollar. These days cable is more often known by its symbol, GBP/USD.

All pairs exhibit a statistical property known as stationarity that is central to the concept of standard deviation, the motive force behind Bollinger Bands. See the GBP/USD chart below for an example.

GBP/USD showing stationarity using Bollinger Bands

Surprising discovery: Using Bollinger Bands to find new opportunities

Years ago, a couple of traders approached me at an MTA seminar and told me how effective my tools were in their work. When I asked what they traded, they said stock pairs. They were using Bollinger Bands to identify when regularly occurring relationships deviated from thenorm, with the objective of profiting when they ‘reverted to the mean'.

This encounter spurred some research on my part, and it turned out that the traders were correct: Bollinger Bandsare quite effective in identifying pairs opportunities. I concluded that this was primarily true because pairs exhibited stationarity. What is stationarity? In statistics it is where a time series is centered around some core value over the long haul.

Individual stocks do not exhibit stationarity – they can run to untold heights or crash to zero – but it is generally true that stock pairs are stationary. It is more often than not true about commodities, where production costs tend to anchor prices over time – another area where Bollinger Bands are quite popular.

In the succeeding years I have observed time and again that, using nothing more than Bollinger Bands, %b, and BandWidth, forex traders have been able to make good market calls, which has been an interesting and satisfying demonstration of the power of these tools.

Why are Bollinger Bands more popular than ever?

Forex and Bollinger Bands have continued to increase in popularity, as many of the other tradable asset classes have become ever more correlated over the years. Many individual traders and portfolio managers have turned to forex as an attractive option for diversification. Tools like Bollinger Bands, which help assess relative price action, can be a powerful option for volatile asset classes like forex.

Enduring power and relevance

One interesting aspect of Bollinger Bands is that virtually none of the forecasting power of Bollinger Bands and the related tools has been diluted over the years, despite dire warnings that such power was either illusory or would be arbitraged away. How can that be? Aren’t Bollinger Bands extremely popular today? Doesn’t that mean they shouldn’t work anymore?

John Bollinger quote

The prime reason that they still work is that Bollinger Bands are built upon first principles ideas that have and will remain at the core of the markets, for forex and beyond. A second important reason is that Bollinger Bands are tools, not systems. That means that they are not used in a monolithic manner; rather they are used in all sorts of different strategies which are constantly evolving along with the markets.

Good trading,

John Bollinger

About John Bollinger

John Bollinger, CFA, CMT, is the president and founder of Bollinger Capital Management, Inc., an investment management company that provides technically driven money management services for individuals and institutions.

He is best known for developing Bollinger Bands®. Traders and investors worldwide use Bollinger Bands to assess expected price action in the financial markets, and the bands are featured on most financial charting software and websites. His book Bollinger on Bollinger Bands has been translated into twelve languages.

Mr. Bollinger is the recipient of the Technical Securities Analysts Association of San Francisco Lifetime Award for Outstanding Achievement in Technical Analysis, the 2005 CMT Association Annual Award for Outstanding Contribution to the Field of Technical Analysis and the IFTA 2015 Lifetime Achievement Award.

www.BollingerBands.com provides educational materials regarding Bollinger Bands.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


News & Analysis at your fingertips.