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Strategies & Market Trends : You buy a stock. It goes down, now what? -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (74)	7/11/1998 9:26:00 PM
From: Wayners	Respond to of 112

Pinched bollinger bands are periods where stocks are exhibiting low volatility--i.e. the stock is trading in a very narrow range on unusually low volume. You may have already noticed that stock prices move in rapid spurts and then the price tends to dampen out. The price oscillates a little bit less after the initial run and then a little bit less than that until you are left with a narrow trading range. These periods are very significant because while most people are yawning and saying I'm moving onto something else that is moving, thats when the stock has another dramatic spurt in the direction of the underlying trend (usually). These are times that you can definitely profit by setting good buy stop limit orders and sell short stop limit orders above and/or below the narrow trading range. When the big spurt inevitably occurs, your order(s) are there to catch most of the spurt and oftentimes the resulting trend. Bollinger bands are simply a way to visualize the periods of low volatility and high volatility. Go to iqc.com. You can plot charts with bollinger bands drawn around price--really shows standard deviation of price. You will notice that the large price moves occur after periods of boring low volatility.