Now it’s your turn. At this point of the course we have set a task to reinforce what we’ve shown you. This task will require you to use a charting package to carry out the exercise. You can set up a free practice trading account with access to charts here.
Goal: To add Bollinger bands correctly and interpret what it tells you.
Exercise: In any charting software add Bollinger bands (20 periods) to any security. This helps traders assess volatility. Make sure the bands are set to two standard deviations. In a daily timeframe review where the bands pinched together and expanded, at these points visually observe what happened to price in the previous 20 days. Observe when the price tagged the lower band in an uptrend and the upper band in a downtrend.
Difficulty: 2/3
Time to complete: 20 minutes
Solution….don’t press play until you’ve done your bit: