First, the basic concept of BOLL line
BOLL line is called BollingerBands, which was put forward by JohnBollinger in 1980s. It is a banded index composed of middle rail, upper rail and lower rail, and the fluctuation range of the price is determined by calculating the standard deviation and moving average of the stock price. Among them, the middle rail is the moving average of the stock price, and the upper and lower rails are plus or minus twice the standard deviation of the middle rail respectively.
The main function of BOLL line is to measure the price volatility and identify the support level/resistance level. When the stock price enters the BOLL line, it indicates that the market is overbought; When the stock price falls below the BOLL line, it shows that the market is oversold. When the stock price breaks through the middle track from below and breaks through the upper track from above, it may form a buy signal; On the contrary, when you break through the middle track from above and break through the lower track, you may form a sell signal.
Second, the calculation method of boll index
The calculation of boll index is divided into the following steps:
1. Calculate the moving average (median line) of the stock price: generally, choose the simple moving average on the 20th, 50th or 20th as the median line.
2. Calculate the standard deviation of the stock price: The standard deviation is a commonly used indicator to measure the price fluctuation, which can be determined by calculating the difference between the stock price and the middle track.
3. Calculate the upper trajectory and the lower trajectory: the upper trajectory is equal to the middle trajectory plus twice the standard deviation, and the lower trajectory is equal to the middle trajectory minus twice the standard deviation.
The calculation method of BOLL index is relatively simple, but it should be noted that the calculation period of standard deviation and the selection of median line will affect the sensitivity and effectiveness of the index and need to be adjusted according to the specific situation.
Third, the application of Bohr index
BOLL index has a wide range of application values in financial markets. The following are several common application scenarios:
# 1. Judging overbought/oversold status
When the stock price enters the top of the BOLL line, it indicates that the market is overbought, and the price may be adjusted or adjusted at this time; Conversely, when the stock price falls below the BOLL line, it means that the market is oversold, and the price may rebound or reverse. Investors can judge the overbought/oversold state of the market according to the fluctuation of the BOLL line, so as to formulate corresponding investment strategies.
#2. Determine Support/Resistance Level
The upper and lower rails of BOLL line can be regarded as the support and resistance of price. When the stock price is close to the upper rail line, it may encounter selling pressure and it is difficult for the stock price to continue to rise; On the contrary, when the stock price is close to the lower rail line, it may encounter buying support, and it is difficult for the stock price to fall further. Investors can determine the timing of buying or selling according to the support/resistance level of the BOLL line.
#3. Looking for a breakthrough signal
When the stock price breaks through the BOLL online track, it may form a buy signal; When the stock price breaks through the lower rail of BOLL line, it may form a selling signal. Investors can judge the market trend according to the situation that the stock price breaks through the BOLL line and make corresponding trading strategies.
Four. Matters needing attention in trading with BOLL line
When trading with BOLL line, you need to pay attention to the following points:
65438 +0. BOLL line is only a technical analysis tool and cannot be used as a basis for trading alone. It should be comprehensively analyzed in combination with other indicators and trading strategies.
2.2. Validity and accuracy. BOLL line needs to be verified in practice, and different markets and varieties may have different effects.
3. When determining the calculation period of the median line and standard deviation, it should be adjusted according to the specific situation to adapt to different market environments.
4. Pay attention to risk control and stop loss strategy in the transaction to avoid the loss caused by blindly pursuing the BOLL line signal.
BOLL line is a commonly used technical analysis index, which can be used to measure price volatility and identify support/resistance levels. Investors can judge the overbought/oversold state of the market according to the signal of BOLL line, look for breakthrough signals and make corresponding trading strategies. However, it should be noted that the BOLL line is only an auxiliary tool, and it should be comprehensively analyzed in combination with other indicators and trading strategies, and attention should be paid to risk control and stop loss strategies.