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If you want to remain invincible in cryptocurrency trading for a long time, relying only on luck and gut feelings is no different from being a gambler, and it's not a long-term strategy. That's why the Bollinger Bands (BOLL) were invented, praised as a short-term trading tool. Today, I'll discuss the principles of Bollinger Bands with everyone (I recommend liking + saving to avoid losing it later):

The Bollinger Bands consist of three lines (upper band, middle band, lower band), where the middle band is the moving average (MA), and the upper and lower bands are drawn based on the standard deviation offset from the middle band, forming a banded channel above and below the price line.

Upper Band = Middle Band + K × Standard Deviation of N time periods.

Middle Band = Simple Moving Average (SMA) of the past N time periods, usually set to 20 days.

Lower Band = Middle Band − K × Standard Deviation of N time periods.

According to the original settings, N is set to 20 days and K is set to 2 standard deviations.

You can find that the middle band of the Bollinger Bands is actually the 20-day moving average (monthly average), so in the initial settings, the Bollinger Bands are suitable for analyzing trading durations of about one month.

Therefore, the summary of the Bollinger Band settings is as follows:

Upper Limit of Bollinger Bands: 20-day moving average + two standard deviations

Middle of Bollinger Bands: 20-day moving average

Lower Limit of Bollinger Bands: 20-day moving average – two standard deviations

Three Long Signals and Three Short Signals

Long Signals

1. When the price crosses the lower band from below, it is a buy signal.

2. When the price crosses the middle band from below, it indicates that the stock price may accelerate upwards, which is an additional buy signal.

3. When the price fluctuates between the middle band and the upper band, it indicates a bullish market.

Short Signals

1. When the price crosses the upper band from above, it is a sell signal.

2. After the price stays for a long time between the middle band and the upper band, if it breaks down from the middle band, it is a sell signal.

3. When the price fluctuates downwards between the middle band and the lower band, it indicates a bearish market.

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