The secret to earning money in a stock market lies in buying and selling between the volatility.
Hence, it is important to continuous buy and sell and book small profits whenever, you get a chance. This is the only way you can build capital. Unless, of-course you are an investor and wish to hold on to equity of 3-5 years.
There is a technical tool called Bollinger Bands that decides the Bullish and Bearish signals, thus, giving you a chance to Buy or Sell, whichever you prefer.
Bollinger Bands is divided in three parts – Upper Band, Standard Deviation and Lower Band.
How to read the Bollinger Band chart?
Till the price is trading below the standard deviation line, the stock price is said to be Bearish where the resistance / Stop Loss (in case of intraday) will be the Standard Deviation line.
Once the stock price crosses the Standard Deviation and trades in the Upper Band, the stock price is said to be Bullish. Then the Standard Deviation line becomes your Stop Loss.
Look at the below example –
You can trade on the Bollinger Bands in any time frame. But just remember, smaller the time frame – lower the profits; Bigger the time frame – Higher the profits.
I hope you guys can earn from this tool.