How to Calculate Bollinger Bands in Excel
It also contains some interesting historical detail about the background to how John Bolinger created the bands. Likewise, relatively low should not be considered bullish or as a buy signal. In the mean time - if you have any additional questions - please do not hesitate to email us at:
Bollinger band excel calculation?
Jan 9, , 2: Andy, Just found this excel prog in my Database.. If you are still keen using the BB then , This is for you.. Jan 10, , 4: Oct 30, , 9: Originally Posted by Grey1. Nov 26, , Inside BB is suppose subway, stand away and watch Only trade with getting outside.
Grey1- What wrong with Bollinger Bands? Regards Last edited by Grey1; Jan 8, at 8: Jul 8, 3: Mar 30, Jan 6, 4: Nov 9, 2: Bollinger band on Dow with MA.
May 1, 9: This dynamic nature of Bollinger Bands also means they can be used on different securities with the standard settings. Click here to download this spreadsheet example. Bollinger Bands consist of a middle band with two outer bands. The middle band is a simple moving average that is usually set at 20 periods. A simple moving average is used because the standard deviation formula also uses a simple moving average.
The look-back period for the standard deviation is the same as for the simple moving average. The outer bands are usually set 2 standard deviations above and below the middle band.
Settings can be adjusted to suit the characteristics of particular securities or trading styles. Bollinger recommends making small incremental adjustments to the standard deviation multiplier. Changing the number of periods for the moving average also affects the number of periods used to calculate the standard deviation.
Therefore, only small adjustments are required for the standard deviation multiplier. An increase in the moving average period would automatically increase the number of periods used to calculate the standard deviation and would also warrant an increase in the standard deviation multiplier. Bollinger suggests increasing the standard deviation multiplier to 2. W-Bottoms were part of Arthur Merrill's work that identified 16 patterns with a basic W shape. In particular, Bollinger looks for W-Bottoms where the second low is lower than the first but holds above the lower band.
There are four steps to confirm a W-Bottom with Bollinger Bands. First, a reaction low forms. This low is usually, but not always, below the lower band. Second, there is a bounce towards the middle band. Third, there is a new price low in the security. This low holds above the lower band. The ability to hold above the lower band on the test shows less weakness on the last decline. Fourth, the pattern is confirmed with a strong move off the second low and a resistance break.
First, the stock formed a reaction low in January black arrow and broke below the lower band. Second, there was a bounce back above the middle band. Third, the stock moved below its January low and held above the lower band.
Even though the 5-Feb spike low broke the lower band, Bollinger Bands are calculated using closing prices so signals should also be based on closing prices.
Fourth, the stock surged with expanding volume in late February and broke above the early February high. M-Tops were also part of Arthur Merrill's work that identified 16 patterns with a basic M shape. According to Bollinger, tops are usually more complicated and drawn out than bottoms.
Double tops, head-and-shoulders patterns, and diamonds represent evolving tops. In its most basic form, an M-Top is similar to a double top. However, the reaction highs are not always equal.
The first high can be higher or lower than the second high. Bollinger suggests looking for signs of non-confirmation when a security is making new highs. But how do I know this? The first step is to locate historical exchange rates. There are many websites that give you this data for any two currencies. But there are three more lines on the chart. Bollinger Bands are equivalent to the day moving average plus or minus two standard deviations.
Similar to the stock market, there are times in which Forex rates change rapidly. This is known as volatility. During periods of volatility the Bollinger bands move further apart, and vice-versa when the market is stable. Now, some professional forex traders have drawn the conclusion that bands that get narrower indicate that the market will become more volatile in the future, while bands that get wider mean that the market will become less volatile in the future.