Customer Reviews

Bollinger on Bollinger Bands

5 star:		(19)
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3 star:		(8)
2 star:		(4)
1 star:		(0)

 

 

I've been trading for a living for more than 5 years, and am now a frequent commentator on a major financial website. As a student of the market, I became familiar with Bollinger Bands very early in my career. I thought I knew how to use them, and ALWAYS looked at them as a reference before entering any trades. However, after reading this book, I realized that I was just barely skimming the surface of this important indicator. I've read it 3 times, and all the margins are now marked up with notes.
The most striking revelation to me was the difference between "absolute" and "relative" readings -- in other words, how a stock could make a new high on an absolute level, but actually be a failure in reference to the upper Bollinger Band. This simple, yet elegant, idea has had a profound effect on how I view price action, and I find that my other technical indicators are much more revealing when viewed in this context. The book is infinitely readable for both novice and seasoned investors, and there is also enough math and statistical data to satisfy most geeks. Mr. Bollinger also discusses various other indicators that can (and should) be used in conjunction with Bollinger Bands.
Remarkably, Mr. Bollinger also supports the content of his book with a free website .... You can use all the indicators he highlights inhis book, and customize them according to your own parameters. It's basicallyan "on-going continuing education" program. Nice to finally see somebody primarily concerned with teaching rather than self-promotion and profit.
The bottom line is this: If you want to learn how to increase your performance in both trending and non-trending markets, this book is a "must-read." It is NOT a trading system; rather, it is an excellent and insightful dissertation on the proper usage of Bollinger Bands. In the current sideways market environment, Bollinger Bands are more useful than ever. No serious trader/investor should be without this book.

A quiet, well paced, unassuming power house of history, insight, and trading experience all rolled into an easy flowing, unpretentious read. Bollinger manages to teach us about his indicator, and about the market itself without shameless self promotion or hype. Bollinger on Bollinger bands is what this market needed, a clear, concise and useful tool for investors to use to provide balance in a chaotic time. As a financial writer, and money manager, who uses Bollinger Bands on every trade, I found that the book gave me new ways to not just trade, but analyze the market and decide when not to trade, which is where the difference between success and failure is often deciced. The book is written in a fluid, easy to digest manner, which gives the reader room to sit back and ponder between chapters. There are clear, one sentence summary statements after each section, which pull the material together quite well and reinforce the main points. Other useful aids include a pull out reference card with statistical formulas and reference charts. The best thing is that Bollinger, a bona fide market guru, doesn't take himself too seriously. He humbly admits that trading has a great deal of uncertainty, and does not tout his own fortunes as a result of his indicator. The book can also be read as a nice historical piece, which begins with the nostalgic foreword by CNBC's Ron Insana about the old FNN news room, including a classic anecdote about the late Ed Hart, who for all of us who knew FNN could only bring a smile. Thanks John.

...is that it continually keeps repeating itself. And Bollinger Bands are one of the tools helping you notice it and profit from it.

If you think you know everything about BB you'd better not say it too loud before you read this book. Being myself a mixture of day-swing trader I have to say it helps a lot, although I look at other tools before entering or exiting a trade. But if you are a position trader or a mid-long term investor, I think the BB are a valuable tool at your disposal. You're not going to make a killing only by using this tool, but if you combine the BB with other tools such as simple or exponential moving averages, volume, RSI and/or momentum and accumulation/distribution, you have much better chances of being financially more independent.

The most part of day-swing-position trading and mid-long term investing book authors tend to make things seem much more complicated than they are (I suspect they do it on purpose-to make you feel foolish or to make you think they are geniuses?). Well, John Bollinger's book is very simple to understand, and it's exactly the simplicity in explaining somehow difficult tools and theories that I like the most.

Was looking forward to this book since I found some systems using BBs. However, was less than impressed. Nothing new, especially for someone that the indicator is named after. Lots of references to his websites too. Squeeze play-expect a move after period of low volatility, yep, nothing new. But, no good discussion on how to implement strategy to capitilize on squeeze. You'll learn more from the following tips than this book,

1. If price touches a rising lower Bollinger Bands (long) or a falling upper Bollinger Bands (short) in the traded time frame, that is a safe entry point.

2. If price touches a lateral (flat) Bollinger Bands and is also touching (or nearly touching) a lateral Bollinger Bands in a higher time frame, that is safe entry for trade in opposite direction.

3. If price touches lateral lower Bollinger Bands (for long) and lower Bollinger Bands on higher time frame is distinctly rising, that is a safe long entry (reverse for short).

4. If price touches lower Bollinger Bands and MACD and/or stochastic on higher time frame is showing long, that is safe long entry.

This is an interesting and easy to read book. It provides the reader with an in-depth explanation of Bollinger Bands and its interpretation and application. The book expands a bit more on how to apply the bands to trading strategies, but it falls short on a more detailed trading system with the bands. For instance, stop-loss, entry, exit, ect. It is a book about the study of an indicator, and that's about it. Nonetheless, it is worth reading!

Unfortunately, the book fails to provide a more detailed explanation on the most interesting aspects of the bands: The squeeze. The squeeze of the bands itself does not tell the trader too much, except that the price action is bound for a strong move. However, it is possible to combine other indicators so to have a solid idea which way the move is going to occur.

Of all the main stream technical indicators, it is safe to say that Bollinger Bands are perhaps the least understood. But they can become part of an arsenal of highly useful technical tools for those who have learned how to properly apply them and one good way to get a running start is to read his latest book, Bollinger on Bollinger Bands. Not only does the book provide some very useful background information on how they came to be, it is an opportunity to hear from the master himself how he uses the bands to best effect. According to Bollinger, one pattern that he calls the Squeeze (a topic on which he spends a whole chapter) draws more questions than any other aspect of Bollinger Bands. As he describes it, his bands "are driven by volatility, and The Squeeze is a pure reflection of that volatility." (Excerpt from Investopedia.com with permission.)

After reading the book, I developed a scan to find stocks that are getting the Squeeze and it works pretty well. Sure enough, a stock that has shown a period of declining volatility, generally breaks out with a bang shortly after reaching a low extreme. The trick is then trying to determine which way. Bollinger includes a number of tips and indicators in the book to help the trader figure that out too.

This book is for anyone who has ever looked at Bollinger bands and tried to understand how to use them as well as those who do use them now but want to get some more great ideas. It is not a difficult read and is actually very well written (I am always surprised by traders who have been steeped in mathematics and technicals like John B. who can also write well.) He is obviously an excellent communicator and this fact comes through loud and clear in his book.

Bollinger on Bollinger Bands is well worth the money. It is also a chance to hear the master who we see on CNBC and in the Wall Street Journal express his ideas and views on markets and how to profit from them. That alone, makes this book worth reading.

Matt Blackman - Technical Writer/Reviewer Email: matt@tradesystemguru.com
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Contributor to Stocks & Commodities Magazine, Working Money, Traders.com Advantage, Active Trader, Traders Mag (Europe) and SFO Magazine

This is a thoroughly practical and readable book. I have read too many where one is encouraged to trade in a specific way and stellar results are guaranteed. Certainly I have found difficulty in extracting profits from some of the snake oil salesmen's ideas. Bollinger does not sell snake oil.

This book is different. It is neither an ego trip nor is it filled with endless pages of tables which serve no useful purpose, other than to make the book seem better value.

He makes plain, that one has to find a trading style to suit oneself, and is not overly proscriptive.

All of his ideas are well laid out and easy to verify and equally applicable to stocks and commodities.

He gives a number of formulae in the book, and these are easily translated into action, in say TradeStation, by seasoned professionals and beginners alike.

In short, this book is excellent, and I hope it will take it's place on the traders best sellers list.

Beeing a Bollinger Band enthusiast for many years, I found it very helpful to read from the creator of the bands how to interpret and use them. There are many ways to use BBs, but the book has helped me to understand and confirm some thoughts of my own. Mr Bollinger describes about M and W formations and how BBs can help you understand and foresee them better. He introduce a new concept to me, normalized indicators and also new indicators derived from the bands themselves. All these indicators come with complete formulas for you to create yourself in your preferred technical analysis program if you want to. He also explains three different strategies were you can use BBs and decribed indicators as systems for your trade. This book is now definately one of my favorites and I will read parts of it over and over again.

It is interesting how things all of a sudden things come together in a Martin Gardner ah-hah! sort of moment. (I wish I had those more often). Anyway, I was developing a trading strategy and was being stymied with coming up with a method for filtering side-ways movements from trending movements. It suddenly dawned on me that this is what volatility is all about. I've been reading much on options and how volatility is an integral part of option trading. There was just so much to assimilate in analyzing options that the simple truth escaped me. High volatility begats low volatility and low volatility begats high volatility. (Among other things) Low volatility leading to high volatility forms the basis for Bollinger's Squeeze Play, otherwise known as the Volatility Breakout Trade. The Squeeze Play is one of three methods Bollinger has cooked up to show the benefits of Bollinger Band utilization.

What it all boils down to is that volatility is basically a study on standard deviation. By using standard deviation bands and calculating differences between them, Bollinger has defined a flexible set of indicators that can be used not only on tradeable instruments, but as component parts of other indicators.

Bollinger continually stresses that Bollinger Bands should not be used independently. The signals they generate should always be confirmed with other indicators. Bollinger has a preference for volume based indicators, which he says tend to lead the market.

Another interesting aspect of the book has to do with pattern matching. I've been wondering how one would generate computer algorithms to detect trading patterns such as the head & shoulders pattern. A few key observations have clarified the picture for me as to defining some ways to proceed. The book proceeds with detailing about 32 different patterns that originated with Arthur Merrill.

It is interesting to note that there is enough material surrounding Bollinger Bands that a whole book can be written regarding the topic. So, by playing around with various combinations of volatility analysis, pattern matching, and volume confirmation, there is no end of possibilities for trading system development.

Mr. Bollinger's book is unusual as books on technical analysis go. No promises of instant wealth here: rather, at the outset, Bollinger tells the reader that the marketplace is an uncertain arena. His view is that the old dictum "Buy low, sell high," is best viewed in relative terms, and he draws our attention to others who have seen the world somewhat similarly, such as Albert Einstein and Oliver Wendell Holmes. The author's stated "other view" is that "Rational Analysis" is the most (dare I say it?) rational way to approach investing. Rational Analysis, in this context, is the blending of fundamental analysis - balance sheets, product lines and such for stocks or carry-over stocks and acres planted for grains, for instance - with technical analysis. Mr. Bollinger has promised us another book dealing with Rational Analysis, and in this book he focuses entirely on the technical side.

The book has a brief introduction to charting to assure that there is someplace to look to understand terminology. Of course, there is an appendix which also sets for meanings for technical and charting terms. Along with this, the author provides us with a short history of technical analysis, an unusual feature. From here he moves into his trademark work, Bollinger Bands, how to construct them and how to use them and how to avoid misusing them which can result in having them abuse you. I should say that about fifteen years ago, I found out how thoroughly one can be bitten by misuse of Bollinger Bands - and it was my own wallet that shrank.

An advanced section, which is, indeed, advanced, is provided in which the author gives his thoughts for altering his work to make it fit the reader's perspective. How to integrate the information provided by B Bands and by his less well-known but quite useful "other creation," %b, into or in with other technical indicators. Also provided are ways to analyze your own trading techniques in order to avoid the trap of using the same data seventeen (my number) different ways that all come up with the same result - which really means that you have only one indicator, not seventeen.

Perhaps Mr. Bollinger's most sage, non-technical analytic advice is put forth early in the book. He tells the reader not to worry about having everyone else use "the system," no matter what the system is, because every individual will use it differently. Thus 1,000 people using The System will trade as if there were 1,000 different systems. And most critically, the reader is advised to devise his own system, to take pieces from systems here and their, and tweak them so that each person has a system that fits his own personality. If YOU are not comfortable with your system, YOU won't be able to trade it effectively. There is much good advice and explication of uses of statistics in general and Bollinger Bands in particular in this book. But if the only thing you take away from the book is the above bit of advice, and if you take it to heart, you'll be richly rewarded in the marketplace. On a personal note, I already used three band sets, BBands one of them; I have now added %b to my arsenal. To my surprise, it does not duplicate any of my other 10 indicators.

This is a book to be thoroughly digested by every trader. While Bollinger Bands are in the everyday parlance of traders now, 20 years ago they were a ground breaking concept. There are other ways to compute volatility, but all that I have seen actually work better when combined with Bollinger Bands and/or its close relative, %b. Although some reviews here dismiss this book lightly, it is seminal and deep. My second reading found important details that I did not notice first time through. I expect I'll find more useful detail when next I reread the book.