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Clojure for Finance by Timothy Washington

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Bollinger Band signals

Bollinger Band signals involve a few more checks. When the band width is very low, this indicates that the price will break out sooner than later. For this strategy, let's call it "A", we need to check for a few things:

  • Is the moving average in an up or down market?
  • Width-wise, we should check for a narrowing Bollinger Band. However, is the bandwidth less than the three previous narrow bands? Three is a random number that can be tuned once this algorithm has been tested on real data.
  • Is the close outside the Bollinger Bands, and previous high or low swing inside the bands?

When the width of the Bollinger Band is high (indicating high volatility), this can mean that a trend is ending soon or that it's either going to change direction ...

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