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Trader Q&A: How Do I Use Bollinger Bands®?

Schwab's Trading Services Team discusses how to effectively incorporate Bollinger Bands into your trading.

 

 

Transcript

[Lou] We have question from Tom in Minnesota, "How do I use Bollinger Bands when trading stocks?"

[Robert] You know, I think—okay, Bollinger Bands tend to be a volatility product, tried to gauge that. There are a couple different ways to use them. A lot of traders use them to try and trade in between. Buy when it hits the lower band. Sell when it hits the higher band. That's one way to use them. Another way to use them is breakouts of the band. When it gets above the band or below the band, [think to buy] when it gets above, or sell when it gets below. Those are a couple different ways to use them. But I think that circles back to, hey, any of these additional things that we're going to use in our trading, we have to understand how they work. You know, you have to educate yourself around it. So I guess I would say, Tom, in our learning center on our Schwab Web site, we've got a wonderful class on Bollinger Bands that we go over all the different ways that you can use to use Bollinger Bands in your trading. I think I would take a look at that first. Make sure you understand how they work, the pluses and the minuses. If you're comfortable with it, then start applying it to your trading.

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