Successful gold traders use every resource at their disposal to inform their trading and help them make profitable decisions that pay off in the short and long term. Economic, political, and social changes can have huge effects on currencies and gold prices. Using world news to inform your trading is known as fundamental analysis.

The other important component is called technical analysis. This is about knowing how to read charts so you know where the market has been, where it is, and where it is going.

Chart indicators tell you everything you need to know, as long as you can read them. A Bollinger Band is a chart indicator that can be used to measure the volatility of a market.

Bollinger Bands were created by investment manager John Bollinger in the early s. The bands basically define high and low prices. The bands consist of three curves that are traced in relation to the price of a currency pairing.

Using Bollinger Bands in Gold Trading

There are upper, middle, and lower bands, all drawn based on a given period of time usually 20 periods and two standard deviations, though these can be adjusted to give a longer or shorter frame of reference.

All you need to know is that Bollinger Bands contract and expand to let you know the activity on the market. When the bands contract, it shows you that the market is quiet. As the bands expand, it shows you that the market is active and the price is moving up. Prices tend to return toward the middle of the bands after reaching the top or bottom, which is called the Bollinger Bounce.

If the prices are nearing the upper band, you can expect them to settle toward the middle band soon. As you can see, the upper and lower bands act like support and resistance levels.

When the bands squeeze together, it means that a breakout is about to happen. If you sense a Bollinger Squeeze, you can catch a move and take advantage. When the daily closing price closes below the lower band, the wise move is to cover and go long. When the daily closing price crosses above the upper band, cover and go short.

Trade Gold Online Start Gold Trading the Spot Gold Price Today. Home Gold Chart Silver Chart Stock Quotes News Market Research Trading Tips Open Account. Using Bollinger Bands in Gold Trading July 27, An Introduction to Bollinger Bands Bollinger Bands were created by investment manager John Bollinger in the early s.

Bollinger Bounce Prices tend to return toward the middle of the bands after reaching the top or bottom, which is called the Bollinger Bounce. The Bollinger Squeeze When the bands squeeze together, it means that a breakout is about to happen.

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