Bowling for Bitcoin
Or rather, Bolling for Bitcoin.
I love Bollinger Bands. (Insert standard "TA isn't always perfect" disclaimer here). While not exactly precise, you could think of them as a cross between Simple Moving Averages ("SMAs") and trend channels. The upper and lower bounds are statistical variants of the SMA, and the size of the trend channel translates to the degree of volatility in price action. As stated in Wikipedia 2018 (en.wikipedia.org/wiki/Bollinger_Bands), BBs are often used as buy/sell points. When the price hits or exceeds the bottom band, it's a buy signal, and when price hits or exceeds the top band, it's a sell signal. I also use them as very effective stop loss points in my own trading, particularly when those levels intersect with other TA studies, such as Fib. retracement levels and 50 & 200 day moving averages.
I don't use BBs to predict future price trends; I'm not an expert on their usage theory but future prediction using BB hasn't been useful for me. They have, however, been excellent options for setting up price point action (buy/sell limits), and have saved my bacon more often than I care to say.
This one year chart of BTC one day action on Coinbase presents this concept well. The Thanksgiving Effect is particularly evident here, and you can literally see the fall off of buying interest after mid-January. And in this study, including the ridiculous price explosion of December, had buy/sell prices coincided with the Bands, one could reasonably argue that a conservative maximum return had been achieved.
Do your own research, and when doing so, give Bollinger Bands a try, at least in your backtesting. Then sit back and set your price point buy/sell traps and/or program your trading bot, and maybe I'll see you in the Caribbean on holiday this fall. Or tomorrow. Or 2047, or whenever.
I love Bollinger Bands. (Insert standard "TA isn't always perfect" disclaimer here). While not exactly precise, you could think of them as a cross between Simple Moving Averages ("SMAs") and trend channels. The upper and lower bounds are statistical variants of the SMA, and the size of the trend channel translates to the degree of volatility in price action. As stated in Wikipedia 2018 (en.wikipedia.org/wiki/Bollinger_Bands), BBs are often used as buy/sell points. When the price hits or exceeds the bottom band, it's a buy signal, and when price hits or exceeds the top band, it's a sell signal. I also use them as very effective stop loss points in my own trading, particularly when those levels intersect with other TA studies, such as Fib. retracement levels and 50 & 200 day moving averages.
I don't use BBs to predict future price trends; I'm not an expert on their usage theory but future prediction using BB hasn't been useful for me. They have, however, been excellent options for setting up price point action (buy/sell limits), and have saved my bacon more often than I care to say.
This one year chart of BTC one day action on Coinbase presents this concept well. The Thanksgiving Effect is particularly evident here, and you can literally see the fall off of buying interest after mid-January. And in this study, including the ridiculous price explosion of December, had buy/sell prices coincided with the Bands, one could reasonably argue that a conservative maximum return had been achieved.
Do your own research, and when doing so, give Bollinger Bands a try, at least in your backtesting. Then sit back and set your price point buy/sell traps and/or program your trading bot, and maybe I'll see you in the Caribbean on holiday this fall. Or tomorrow. Or 2047, or whenever.
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