Bollinger Bands are a technical trading tool created by John Bollinger in the early 1980s. They arose from the need for adaptive trading bands and the observation that volatility was dynamic, not static as was widely believed at the time.

The purpose of Bollinger Bands is to provide a relative definition of high and low. By definition prices are high at the upper band and low at the lower band. This definition can aid in rigorous pattern recognition and is useful in comparing price action to the action of indicators to arrive at systematic trading decisions.

Bollinger Bands consist of a set of three curves drawn in relation to securities prices. The middle band is a measure of the intermediate-term trend, usually a simple moving average, that serves as the base for the upper and lower bands. The interval between the upper and lower bands and the middle band is determined by volatility, typically the standard deviation of the same data that were used for the average. The default parameters, 20 periods and two standard deviations, may be adjusted to suit your purposes:

Middle Bollinger Band = 20-period simple moving average
Upper Bollinger Band = Middle Bollinger Band + 2 * 20-period standard deviation
Lower Bollinger Band = Middle Bollinger Band - 2 * 20-period standard deviation

Two important tools are derived from the Bollinger Bands: BandWidth, a relative measure of the width of the bands, and %b, a measure of where the last price is in relation to the bands.

BandWidth = (Upper Bollinger Band - Lower Bollinger Band) / Middle Bollinger Band
%b = (Last - Lower Bollinger Band) / (Upper Bollinger Band - Lower Bollinger Band)

BandWidth is most often used to quantify The Squeeze, a volatility-based trading opportunity. %b is used to clarify trading patterns and as an input for trading systems.

Alligator Indicator - This technical indicator consists of 3 lines. They are Moving Averages with various parameters. Here they are:

The First line, or the chap of alligator, is a line of balance to the considerable period of time. It’s used for the chart constructing - 13 period smoothed shifting average, moved on 8 bars to the future. The Green line, or the lips of alligator, is the line of balance for the considerable period of time, which is one more step less - 5 period smoothed shifting average, moved on 3 bars to the future. The Red line, or the teeth of alligator, is the line of balance for the considerable period of time, which is one step less - 8 period smoothed shifting average, moved on 5 bars to the future.

How to interpret the lines? When all of them are jolloped, it means that the “Alligator” is sleeping, and the more it sleeps the more hungry it gets. Of course, when it wakes up after long sleep, it’s very hungry and starts “hunting for food”, which is price, till it is glutted. As soon as it happens, it looses interest to the food, which is price, and then the balance lines meet at the same point. It’s when you should fix your profit. It’s time to close all positions and wait till Alligator awakes up next time.

This indicator’s aims are the following:

1. To become an easy for usage indicator to trade only in the current trade

2. To develop a reliable way of saving the money during the moving of the market bounded with the price channel

3. To represent united way for monitoring of the moving of the market

The ADX indicator measures the strength of a trend and can be useful to determine if a trend is strong or weak. High readings indicate a strong trend and low readings indicate a weak trend.

When this indicator is showing a low reading then a trading range is likely to develop. Avoid stocks with low readings! You want to be in stocks that have high readings.

This indicator stands for Average Directional Index. On some charting packages there are two other lines on the chart, +DI and –DI (the DI part stands for Directional Indicator). Ignore these lines. Trying to trade according to these two lines is a great way to lose money! The only thing that we are concerned with is the ADX itself.