I recently watched a video in which John Bollinger, the creater of the Bollinger Bands discussed the creation of the bands and gave some insight on how he uses them. I hadn’t previously heard John Bollinger himself speak and so it was very enlightening. Here’s the link incase you are interested:
You’ll have to enter your name and email address on that site in order to see it, but it is worthwhile if you haven’t heard John Bollinger before.
I didn’t realize that Bollinger Bands are 26 years old this year – thought they were older than that.
Of course during the video I couldn’t help myself think of EdgeRater and how some of his charts could be displayed and so I did a bit of arranging and came up with a chart that mimics what John Himself finds useful for his trading:
Also at time code 7:49 in the video he makes reference to how Bollinger Bands can be used for indicator normalization, and the example he gives is how the RSI signals of level 30 and 70 can be improved by using a 50 period Bollinger Band of RSI and then plotting %B of that. I put that script together and the output can be seen here:
My script that produced that chart is:
WRSI:= RSI(C, 14);
MID:= MA(WRSI, N);
UPPER:= MID + P*STDP(WRSI, N);
LOWER:= MID – P*STDP(WRSI, N);
B : (WRSI – LOWER) / (UPPER – LOWER);
Fire up EdgeRater and enter this formula – you’ll be able to see the difference yourself.