Jayton van den Berg

Technical indicators for life!!!

Let’s start with technical indicators, which are also sought after by more than 80% of global traders. This is because it can be used as our operational forecast to distinguish trends to determine whether future trends are rising or falling and is highly accurate.
Therefore, learning this technical index and using it for life is a valuable treasure for stock traders.
You also need to continue to practice, please back up and save this technical indicator for your repeated practice!

What is the Brin line? Brin line is a technical index developed by John Brin in the 1980 s, which is used to draw the standard deviation around the moving average. This is an example chart:

The Brin line expands with the increase of price volatility and tightens with the decrease of volatility. A wider band means a higher standard deviation, which means that the average price is unlikely to be concentrated near the average value.

Bollinger Bands are used to create context and structure around price.
It allows you to answer questions such as “Is the price now high or low relative to the price history of this stock?” or questions such as “Is the price high or low now relative to this stock’s price history? Or “Is today’s price movement part of the stock’s normal volatility or is it statistically significant?

Normal Distribution
Bollinger bands are simply a tool that allows you to easily utilize the statistical concepts of standard deviation and normal distribution in your charting platform. This
However, if you’re like me and have been put to sleep by a college statistics class, allow me to quickly explain the concept of standard deviation. If you are already familiar, you can skip this section.

In statistics, there is a concept of “normal distribution”. A normal distribution is a way of categorizing the probability of something happening.
It is the most commonly used probability distribution in statistics, and you have no doubt seen its visual representation, the bell curve, before.

This visualization makes it easy to measure the possibility of a series of results. The higher the curve center, the fewer outliers. When the center of the curve is short, the variance of the data will be much higher.
If you still remember that in the early response to COVID, the public health authorities faced the pressure of “flattening the curve. This is a popular chart that you may see in March 2020. It perfectly illustrates this point:

The point is to flatten the height of the y-axis, i.e. how many people are infected with the virus at one time.
The main difference between the yellow and blue curves is that if you randomly select a person infected with coronavirus, it will be more concentrated on the average of the blue curve (i.e., most people get sick at the same time).
This is in contrast to the yellow curve, which has a more spread out date of illness.
The yellow curve has a high standard deviation: the mean strongholds are more likely to deviate from the mean.
The blue curve has a low standard deviation: the mean strongholds are more likely to be clustered around the mean.
Normal distributions are a clever way of organizing data into curves that quickly tell us how likely the outcome is. Of course, it’s important to note that the data is completely normally distributed, while many data sets are not.

Standard Deviation
The standard deviation of a dataset measures the extent to which the mean data points differ from the mean.
A low standard deviation means that most of the data is close to the mean, while a high standard deviation means that the data has a much higher variance.
Applying this to stock prices, the more volatile the price, the higher the standard deviation and vice versa. Stocks with high standard deviations mean that prices often move away from the mean (in the case of Bollinger Bands, the moving average.
The Brin belt of this trend will be very wide

Brin band formula
It is essential to understand the mathematics behind the indicators used to make transaction decisions. It is also important to realize that academic mathematics is confusing and for some reason the use of Greek letters is standardized.
This is the formula of standard deviation

If you have never paid attention to math class like me, then there are some very simple articles to explain these concepts.
Once you understand the basic mathematics behind the standard deviation, the Brin band formula is very simple:

❗N standard deviations in the upper band graph are higher than the moving average
moving figure N the middle band of the moving average line
The N standard deviations of the lower band graph are lower than the moving average

How to use Brin belts in transactions
All trading strategies take advantage of two main market phenomena: Mean regression and trend tracking.
In short, mean reversion seeks to hold stocks when the stock price deviates significantly from the historical average level, and it is expected that the price will be mean-reversion. Trend tracking assumes that the moving stock price tends to keep moving and trade with the trend.

You can use the Brin line as a primary or secondary tool, using mean regression and trend tracking.
If you search for “Brin belt strategy” on Google or YouTube, most of them will mean regression strategy.
The bringer band makes the mean regression transaction easy to visualize. Using the statistical concept of normal distribution, these bands allow you to quickly evaluate whether the price is “normal”.
Here is an example of a simple Bollinger Bands trend retracement long trade setup:

As you can see, while the above analysis is at a surface level, you need at least some background in order to feel confident in your trading.
This is an example of a malformed setting. Of course, for illustration purposes, I’ve chosen a really bad example. Most settings are closer to the periphery. My rule of thumb is that if it’s not bouncing off the page, there’s a better setting out there.

The stock is in a long-term downtrend.
Sales and revenues are falling.
Bollinger Bands are almost 40 years old and are still one of the most prominent technical indicators used by very successful traders. Sometimes simple ideas, such as using basic statistical concepts of stock prices, are the most persistent. Even in the age of high-frequency trading and alternative data, Bollinger Bands still have a place in the trading world.

It’s all about Bollinger Bands.
Friends, please make sure you save, backup and record. It is convenient to iterate in your own daily transactions.
People who have read this can add this indicator to your own application and try to use the Bollinger Bands indicator to find the direction of stock trading.