Bollinger Band is a binary options analysis tool that was developed and named after popular modern day technical investment analyst John Bollinger. These bands are usually plotted two standard deviations apart from the usual simple moving average. The goal is to discover asset volatility by the location of bands; if the Bollinger Band is moving closer to the average it indicate that the market for the asset is decreasing in volatility and if the Bollinger bands move away from the average then it indicates a more volatile trend.
So the question is, how can volatility be deployed as a technical indicator for calls and puts when trading binary options? Volatility is usually associated with risk and directly translate to the amount of risk or uncertainty about the range of change in a security asset value. So, higher volatility indicates that an asset value will most likely be spread out over a brand range of values which literarily means that the price of an asset can potentially change in a dramatic manner downward or upward within a short period of time. An asset with low volatility often remain steady over a short period of time and tend not to
Read more ... source: NewsBTC USA
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