Bollinger Bands: A Tool for Successful Trading on Binance
Bollinger Bands is a technical indicator that allows you to assess market volatility and identify possible entry and exit points for trades. They consist of three lines: a moving average (SMA) and two bands located at a certain distance (standard deviation) from it.
How to use?
1. Compression: The bands narrow when volatility is low, signaling a likely future momentum.
2. Expansion: Increased volatility expands the bands, indicating market activity.
3. Support and resistance levels: A price that touches the upper band may be overbought, and the lower band may be oversold.
Practice on Binance
On Binance, traders use Bollinger Bands to make decisions: buy near the lower limit and sell near the upper limit. To avoid false signals, combine this indicator with other tools.