Book Summary: Bollinger on Bollinger Bands by John Bollinger

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Bollinger on Bollinger Bands is a comprehensive guide to using Bollinger Bands, a popular technical analysis indicator, in trading.

Written by John Bollinger himself, the creator of Bollinger Bands, the book is a must-read for traders of all levels looking to improve their trading skills and increase their profits.

In this blog post, I will share all about this book and the author, key ideas from the book, and how you can apply it to your own trading & investing journey.

About the Author

John Bollinger is a well-known figure in the trading world and the creator of Bollinger Bands, a technical analysis tool used by traders to measure market volatility and identify trends.

Bollinger has over 30 years of experience in the financial markets and has written several books on trading and technical analysis.

He is also the president of Bollinger Capital Management, an investment management firm that provides technical analysis and portfolio management services to institutional and individual clients.

What is the Book About?

The main message of the book is that Bollinger Bands are a powerful tool that can help traders make informed decisions about when to enter and exit trades.

The book covers a wide range of topics related to Bollinger Bands, including how to use them to identify trends, spot potential reversals, and gauge market volatility.

Bollinger also provides guidance on how to effectively combine Bollinger Bands with other technical indicators and fundamental analysis to form a complete trading strategy.

10 Key Ideas from the Book

Here are 10 key ideas from the book:

1. Bollinger Bands are a technical analysis tool used to measure market volatility and identify trends. They consist of three lines plotted on a chart: a moving average, an upper band, and a lower band. The upper and lower bands are plotted at a standard deviation above and below the moving average, respectively.
2. Bollinger Bands are useful for identifying overbought and oversold conditions in the market. When the price is trading near the upper band, it may be overbought, and when it is trading near the lower band, it may be oversold.
3. Bollinger Bands can be used in conjunction with other indicators and techniques to confirm trends and help with decision-making. For example, if the price breaks through the upper or lower band, it may be a sign of a trend reversal, and if it bounces off the band, it may be a sign of a trend continuation.
4. Bollinger Bands can be customized to fit the specific needs and preferences of the trader. The moving average, standard deviation, and time period can be adjusted to fit the trader’s trading style and market conditions.
5. Bollinger Bands can be used in all market conditions and time frames, from short-term to long-term, and can be applied to any asset class, including stocks, forex, and commodities.
6. Bollinger Bands can be used as a standalone tool or as part of a larger trading system. It is important to have a clear trading plan and risk management strategy in place to ensure consistent profits.
7. Bollinger Bands can be used to identify potential entry and exit points in a trade. By using Bollinger Bands in combination with other technical analysis tools, traders can look for opportunities to enter a trade when the price is near the lower band or exit a trade when the price is near the upper band. For example, if the price is trending upwards and bounces off the lower band, a trader may look for a buying opportunity, and if the price is trending downwards and breaks through the upper band, a trader may look for a selling opportunity.
8. Bollinger Bands can be used to identify trends and trend reversals in the market. When the price is trending upwards, the bands will often expand, and when the price is trending downwards, the bands will often contract. If the price breaks through the upper or lower band, it may be a sign of a trend reversal, and if it bounces off the band, it may be a sign of a trend continuation.
9. Bollinger Bands can be used to help traders manage their risk. By setting stop loss orders at the upper or lower band, traders can limit their potential losses in the event of a sudden market move.
10. Bollinger Bands can be used to help traders identify potential areas of support and resistance in the market. When the price is trending upwards and hits the upper band, it may act as a resistance level, and when the price is trending downwards and hits the lower band, it may act as a support level.

10 Ways to Apply the Teachings

Actionable Ways to Apply What is Taught in the Book:

1. Use Bollinger Bands as a key tool in your trading strategy to help identify overbought and oversold conditions in the market.
2. Customize Bollinger Bands to fit your specific needs and preferences by adjusting the moving average, standard deviation, and time period.
3. Use Bollinger Bands to identify potential entry and exit points in a trade by looking for opportunities to enter when the price is near the lower band or exit when the price is near the upper band.
4. Use Bollinger Bands to help identify trends and trend reversals in the market by looking for expansions and contractions in the bands and breaks or bounces off the upper or lower band.
5. Use Bollinger Bands to help manage risk by setting stop loss orders at the upper or lower band.
6. Use Bollinger Bands to help identify potential areas of support and resistance in the market by looking for the price to hit the upper or lower band.
7. Use Bollinger Bands to help improve your trading discipline by following a clear trading plan and risk management strategy.
8. Use Bollinger Bands to help improve your market analysis skills by studying how the bands react to different market conditions and events.
9. Use Bollinger Bands to help improve your decision-making skills by using them in conjunction with other technical analysis tools and techniques.
10. Use Bollinger Bands to help improve your trading performance by consistently applying what you have learned from the book and regularly reviewing and adjusting your trading strategy.

Other Important Points from the Book

Other Points to Consider:

• Bollinger Bands are a technical analysis tool and should not be used as a standalone indicator. It is important to use them in conjunction with other technical analysis tools and techniques to confirm trends and help with decision-making.
• Bollinger Bands are based on historical data and do not predict future market movements. It is important to use them as a guide and not a guarantee of future performance.
• Bollinger Bands are affected by market volatility, and the bands may expand or contract depending on the level of volatility. It is important to consider this when using Bollinger Bands to identify trends and potential entry and exit points in a trade.
• It is important to regularly review and adjust your trading strategy and Bollinger Bands settings to fit changing market conditions and your own trading style.
• It is important to have a clear trading plan and risk management strategy in place to ensure consistent profits and protect against potential losses.

Practical Application & Tips

I have found Bollinger on Bollinger Bands to be an extremely useful and valuable resource in my personal trading.

As a full-time trader, I am always looking for ways to improve my trading skills and increase my profits.

Bollinger on Bollinger Bands has helped me do this by providing a clear and simple approach to using Bollinger Bands as a key tool in my trading strategy.

By following the book’s guidance on customizing the bands to fit my specific needs and preferences, as well as using them in conjunction with other technical analysis tools and techniques, I have been able to consistently identify overbought and oversold conditions in the market and enter and exit trades at favorable times.

In addition, the book’s emphasis on treating trading as a business and having a clear trading plan and risk management strategy in place has been invaluable in helping me approach trading in a professional and disciplined manner.

By following these principles, I have been able to consistently generate profits and protect against potential losses.

One practical example of how Bollinger on Bollinger Bands has helped me in my personal trading is a trade I made in the EUR/USD currency pair.

I was looking for a buying opportunity and noticed that the price was trending upwards and had bounced off the lower band, indicating a potential trend continuation.

I also used other technical analysis tools to confirm the trend and set a stop loss order at the upper band to limit my potential losses.

The trade ended up being a success, and I was able to generate a profit thanks to the application of its principles.

Concluding Thoughts

In conclusion, Bollinger on Bollinger Bands is a comprehensive and valuable resource for traders of all levels looking to improve their trading skills and increase their profits.

The book’s clear and simple approach to using Bollinger Bands as a key tool in a trading strategy, as well as its emphasis on market psychology and a multi-faceted approach to trading, make it a must-read for anyone looking to take their trading to the next level.

I would highly recommend this book to both beginner and experienced traders who are looking to improve their trading skills and results.

Now that I have covered all the key learning points of this book, would you consider adding it to your reading list?

For those who have already read it, what are some of your key learning points?

Let me know in the comments below.

If you would like to find more book summaries and recommendations, also check out: “Best Investing & Trading Books of All Time”

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Spencer Li

Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media.