It does not matter if you are a beginner or a stock exchange trader - you have probably heard about the Bollinger ribbon, and you certainly have heard about this name. John Bollinger (the nice Lord at the top) is the author of the ribbon, the task of which is to show the highs and lows on the stock chart. Interestingly, the author himself believes that the ribbon is only an indicator, not a buy and sell signal generator.

I will not delve into the mathematical calculations of how it works, but I will go straight to the details. The Bollinger Bands consist of three lines that follow side by side. Price drifts between these lines. When the chart hits the top of the band, there is a high probability that the price will reverse. In the case of the bottom line it is similar - except that if the price touches the bottom line of the band, there is a high probability that it will bounce upwards.

Simple right? Now the question arises, what the hell is this middle line? She doesn't give us any signals, doesn't she? Well no. She also gives signals only in other conditions. What you see in the picture above is stagnation prevailing on the market. In other words, the market is stagnant and the price is not going in any particular direction - it rises a little and falls a little, but it is not in a trend. Only then, I recommend using the top and bottom lines of the Bollinger Bands.

In the picture above, you can see a short piece of an uptrend. Notice that the price doesn't bounce off the bottom line, but more or less off the middle. That's what this line is for. So if you see that the market is in a particular trend, whether it be up or down, you need to build on the middle line. Of course, in the case of an uptrend, the price bounces off the top line and the middle line, but in a similar situation when there is a downtrend, the price bounces off the bottom line and the middle line.

I note that this is not a description of the strategy but a demonstration of one of the most popular indicators that allow predicting price movement. Soon there will be an entry and a video on YouTube regarding the strategy of investing in macroeconomic events. Meanwhile, I wish you effective trading and best regards.