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Take a look of our daily scan results on Bollinger Bands and its formula.

Bollinger Bands is one of the most popular technical analysis technique, it was invented by John Bollinger in 1980s. It is a indicator that allows us to compare the volatility of the market and relative price levels over a period time.

Bollinger Band consists of three line, a simple moving average in the middle, a upper band which is SMA plus 2 standard deviations, a lower band which is SMA minus 2 standard deviations.

Take a look of our daily Bollinger Bands scan results

Bollinger Band is most effective in a range-bound markets, in such a market, traders use them primarily to determine overbought and oversold levels. Selling when price touches the upper Bollinger Band and buying when it hits the lower Bollinger Band.

Formula
The following are the steps to calculate Bollinger Bands

We scan for stocks that break and close above or below the upper and lower Bollinger Band, because it has been found that buying at the breaks is a way to take advantage of oversold and overbought conditions. Once the upper or lower band has been broken, the stock's price will likely to revert back in to the band.

Caution: Every strategy has its drawbacks and this one is definitely no excaption and we strongly advice you to combine this strategy with other technical analysis to determine a strong and valid entry point.