Developed in the 1980s, Bollinger Bands are among the most elegant and most reliable of technical analysis tools to help keep a rein on risk. In fact, they’ve become a standard tool to compare price and critical indicator movements in a volatile market. They’re one of the tools available on our trading platform, and they may be extremely useful in providing models when trading index CFDs.
When it comes to watching price movements of any instrument, it helps to have an understanding of where price is trading relative to its average. That’s where Bollinger Bands come in. They assess recent trading activity using a very powerful statistical measurement tool, the standard deviation, which provides a value within which the price has a probability of not moving further. It is possible to see when a new trend may be developing.