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Bollinger Bands Indicator

Bollinger bands are a technical indicator designed to measure the price volatility of a financial asset. On a chart, it looks like an 'envelope' that has a middle line (based on moving average) with two lines above and below the central line. Those lines are usually two standard deviations from the central line, so the envelope becomes broader and narrower - depends on the asset volatility.


Why use it?

The Bollinger bands create an envelope for the 'normal' range of the price. When the asset crosses that envelope (usually set as two standard deviations in each direction), it is considered an extreme event. Sometimes it indicates a strong momentum for the asset (such as surprise in earnings). Still, it often indicates a short term over-extension, and there is a high probability of mean revision. This means we can use the indicator to time our entries/exits and increase our profits and edge.


How to use the indicator in SamurAI

In SamurAI, we've built an advanced filter that allows you to filter results according to their distance in standard deviations. This means you can find stocks in an extreme range (or crossed into/out-from it). The indicator is entirely flexible, and you can decide the time frame, amount of standard deviations, and the duration in the extreme range.
This is very useful to find stocks that are in extreme conditions or have recently entered extreme conditions. Another unique feature is the breadth, where you can find stocks that have been in extreme condition (for example, above the upper band) for a long duration (such as a week or a month). See common use cases below.


Settings



  1. Length: in days. During the market hours, we will simulate the last price as the closing price for that day to show you how the bands changes during market hours.
  2. From: and To: - These are the filters to initiate the zone you want the stock to be. The most common zones are: Above upper band (From: 2) and Below lower band (To: -2).
  3. Min Periods inside/outside range: How long the Stock was above or below the bands.
    You can replace the 'inside' and 'outside' the range filters by clicking on the word.
    The number is in days - how many days you want the stock to be above or below.
    This is useful for: 
    1. Cross: Set it as min periods outside to 1.
    2. Breadth: Set it as min period inside for 5, for example (About one week).
    3. See more common use cases below.

Common use cases

  1. Stock is above upper Bollinger band - (1) Length: 20 (default) (2) From:2 (3) To: Empty (4) Mid Periods outside range: 0 (default)
  2. Stock is below lower Bollinger band - (1) Length: 20 (default) (2) From:empty (3) To: -2 (4) Mid Periods outside range: 0 (default)
  3. Stock crossed above the lower Bollinger band (bullish) - (1) Length: 20 (default) (2) From: -2 (3) To: Empty (4) Mid Periods outside range: 1
  4. Stock crossed below upper Bollinger band (bearish) - (1) Length: 20 (default) (2) From: Empty (3) To: 2 (4) Mid Periods outside range: 1
  5. Stock is below lower Bollinger band for more than two weeks - (1) Length: 20 (default) (2) From: Empty (3) To: -2 (4) Mid Periods INSIDE range: 10


Predefined

[comming soon]


Read more

About Technical analysis Engine - KB
About Bollinger Bands - KB
About RSI - KB
About MA indicator - KB
About MA Crossover indicator - KB
About MA Rank (unique) indicator - KB
About MACD indicator - KB
About Stochastic Oscillator - KB
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