A Better Grounded Way of Judging When a Stock or Other Asset is Ready to Break Out

Day trading is both an art and a science, and successful investors have to appreciate and accommodate both sides of the discipline. If it were always possible to spot the right trade and moment in purely deterministic fashion, computers would long since have taken over from those investors who trade most actively.

In practice, though, the inherently human side of trading inevitably makes its importance known, and highly successful day traders therefore tend to rely fairly extensively on their instincts. In just about every case, however, they will do so only after having made the utmost possible use of all the available means of analyzing and objectively assessing price movements and other types of data.

As those who learn today here will see, there are good ways for day traders to bridge the gaps that sometimes crop up between the analytic and intuitive sides of the discipline. The proper use of bar-based charts that include Bollinger bands, for instance, often ends up being one such tool for particular traders.

Instilling a More Definite, Objective Perspective into a Measure That Remains Fuzzy for Many

Just about every day trader will be regularly interested in assessing when a particular stock or other asset is most likely to break out of an established, customary trading range. While there are various popular tools for doing so, one combination of chart features regularly ends up being the preferred choice of successful investors.

Bollinger bands were invented sometime in the 1980s, and they have become a mainstay of day trading since. With two continuous bands marking out a set number of standard deviations from historically established pricing averages, judging the width of what might be called a “normal” trading range becomes much easier.

Feeding Trading Intuition with All the Data It Needs

Coupled with bar-style pricing indicators that each reflect a set number of price movements, this indicator ends up being, for many investors, an especially helpful way to judge when trading is ready to break out into a new range of pricing. What might otherwise be an entirely subjective seeming judgment can therefore be informed in ways that help make trading a lot more consistent, grounded, and effective.