By John Bollinger, CFA, CMT, Creator of Bollinger Bands*

Trading bands have been around for many years and come in many varieties. Sometimes they are called bands, sometimes envelopes, and, occasionally, channels. The methods of computation are all over the board, some adaptive, some fixed.

Whatever the name or method of computation, all trading bands serve the same general purpose; they define whether prices are high or low on a relative basis. The trader, armed with that information, can, then, make rigorous trading decisions. Those decisions might involve pattern recognition, confirmation (or lack thereof) with other technical indicators / methods, or they can focus on the information generated by the bands themselves.

By Mike Parnos, Educator, Trader and Hedge Fund Manager*
Posted: May 9, 2008

Buy low; sell high. Sell high; buy low. Sounds easy, doesn't it? Well, there's a little more to it than that. Buy what? Sell when? Who's high? What's low?

A few years ago, thousands of people left high-paying jobs in the hope of making a living by trading in the stock market. Little did they know…and that "little" is why they're now working their way back up the corporate ladder one cheeseburger at a time.