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Posted August 18, 2002
I have lost hundreds of thousands of dollars in the market over the past few years but after having bought and read this book, I realize it is the best thing that has ever happened to me. Following the simple trading strategies outlined in the book made me back all of the money I lost and it took me only 3 months. Incredible !!! I very strongly recommend this book to grandmothers, housewives, and other people who don't have a clue about the stock market.
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Posted November 14, 2001
A Very Simple Introduction to Bollinger Bands
A Very Simple Introduction to Bollinger Bands If you have heard of Bollinger Bands, but don¿t know what they are, Bollinger on Bollinger Bands will be a good simple introduction. On the other hand, you probably don¿t need to know what Bollinger Bands are unless you plan to trade stocks or commodities rather than holding cash, bonds, or indexed stock mutual funds. Even then, the subject is optional. The book references a Web site you can go to in order to get investment ideas based on this type of technical analysis. Basically, there are three simultaneous Bollinger Bands. The middle one is usually a 20 period (hour, day, week, or month) moving average of the stock price (or other index or commodity you are tracking). The upper one is separated from the middle one by somewhere between 1.5 and 2.5 standard deviations. The lower one is separated by the equivalent amount. The relative difference is based on how many periods you are using. The key equations involved are printed on two sheets of card stock that you can pull out of the book to use separately from the book, or as book marks. You use Bollinger Bands to create a relative measure of stock price. John Bollinger warns you that you have to use some art in constructing the bands to fit the data set you are using. Once in place, Bollinger Bands can be used to help spot switches in trends, identify trends that are likely to continue, and to generate ideas for possible investments. You are encouraged to use Bollinger Bands in conjunction with a wide array of other technical data, and fundamental analysis. The discussion of which other technical data to use is quite good. The fundamental analysis discussion is mostly missing. Those who are interested in a history of technical investment analysis will find this book a user friendly reference to the best work on ¿envelopes¿ around prices during the last three decades. The text is supplemented with large numbers of graphs to support the key points. There¿s an extensive glossary as well. If you rapidly grasp technical analysis, you can skip to the sections near the end where three investing methods are proposed. If you do that, the book will seem like a long article to you. After reading the book, I looked at all of the stocks in my portfolio using Bollinger Bands, and found that Bollinger Bands would not have been very helpful for spotting buying opportunities in the last two years. Bollinger Bands would have pointed out the risk of loss in three situations. Other technical tools would have turned up more buy/sell points on these stocks than Bollinger Bands. I¿m not sure that I will use them after reading the book. Realizing that you can beat over 90 percent of professional money managers in total return by simply holding indexed stock mutual funds over the next ten years, how much effort do you want to put into learning more technical tools? Add knowledge that makes you wiser, rather than simply busier! Donald Mitchell, co-author of The 2,000 Percent Solution and The Irresistible Growth Enterprise
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