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Bollinger Bands (BBands)

Description

Bollinger Bands are a volatility indicator that is displayed as two lines (bands): one drawn above a simple moving average of the price and one - below. These bands move closer to the moving average when price volatility is low and move farther away from the moving average when price volatility increases.

Parameters

Bollinger Bands parameters can be adjusted. The default parameters are: 20 periods for the simple moving average and 2 for the standard deviations (the distance between each band and the SMA). Increasing the number of periods - decreases the volatility of the SMA, and decreasing their number - increases the volatility of the SMA. Increasing the number of standard deviations moves the bands farther away from the SMA, and decreasing - moves the bands closer to the SMA.

Bollinger Bands parameters are the period and the deviation.

Function

Bollinger Bands are used to determine how volatile a stock is. Stocks move between levels of high and low volatility, and when the Bollinger bands grip a stock, it is a sign that the stock is consolidating and that a breakout is inevitable. When the Bollinger bands widen, it is a sign that the stock has burst out into a new trend.

Bollinger Bands %B (BBands B)

Description

Bollinger Bands %B is an indicator derived from Bollinger Bands.

Parameters

%B quantifies a security's price relative to the upper and lower Bollinger Band. There are six basic relationship levels:

  • %B equals 1 when price is at the upper band
  • %B equals 0 when price is at the lower band
  • %B is above 1 when price is above the upper band
  • %B is below 0 when price is below the lower band
  • %B is above .50 when price is above the middle band (SMA)
  • %B is below .50 when price is below the middle band (SMA)

Bollinger Bands %B parameters are the period and the deviation.

Bollinger Bands Width (BBands Width)

Description

Bollinger Bands Width is an indicator derived from Bollinger Bands.

Non-normalized Bollinger Bands Width measures the distance, or difference, between the upper band and the lower band. Bollinger Bands Width decreases Bollinger Bands narrow and increases as Bollinger Bands widen because Bollinger Bands are based on the standard deviation.

Parameters

Bollinger Bands Width parameters are the period and the deviation.

Modified Moving Average (MMA)

Description

A Modified Moving Average (MMA) (also known as Running Moving Average (RMA), or SMoothed Moving Average (SMMA)) is an indicator that shows the average value of a security's price over a period of time. It works very similar to the Exponential Moving Average, they are equivalent but for different periods (e.g. the MMA value for a 14-day period will be the same as EMA-value for a 27-days period).

MMA is partly calculated like SMA: the first point of the MMA is calculated the same way it is done for SMA. However, other points are calculated differently:the new price is added first and then the last average is subtracted from the resulting sum.

Parameters

MMA indicator has only one parameter: the period.

Moving Average Convergence/Divergence (MACD)

Description

The Moving Average Convergence/Divergence (MACD) is a momentum indicator that consists of two lines - an indicator line and a signal line. The indicator line displays the difference between two exponential moving averages with different smoothing factors, and the signal line displays an exponential moving average of the difference between mentioned two exponential moving averages.

Parameters

MACD parameters can be adjusted. The default parameters are 26 for the slow exponential moving average, 12 for the fast exponential moving average and 20 for the signal line. Decreasing any of the parameters decreases the volatility of the related line, and increasing them - increases the volatility of the related line.

Function

The MACD is used to determine is there bullish or bearish momentum behind a stock. When the indicator line is above the signal line, the MACD shows bullish momentum, and the indicator line below the signal line in the MACD shows bearish momentum.

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