Bollinger Bands StrategiesWritten by Steven T. Ng
The Bollinger Band theory is designed to depict volatility of a stock. It is quite simple, being composed of a simple moving average, and its upper and lower "bands" that are 2 standard deviations away. Standard deviations are a statistical tool used to contain majority of movement or "deviation" around an average value. Bear in mind that when you use Bollinger Band theory, it only works as a gauge or guide, and should be use with other indicators.Normally, we use 20-Day simple moving average and its standard deviations to create Bollinger Bands. Strategies some investors use include shorter- or longer-term Bollinger Bands depending on their needs. Shorter-term Bollinger Bands strategies (less than 20-Days) are more sensitive to price fluctuations, while longer-term Bollinger Bands (more than 20-Days) are more conservative. So how do we use Bollinger Band theory? The Bollinger Band theory will not indicate exactly which point to buy or sell an option or stock. It is meant to be used as a guide (or band) with which to gauge a stock's volatility. When a stock's price is very volatile, Bollinger Bands will be far apart. In technical indicator charts, this is depicted like a widening gap. On other hand, when there is little price fluctuation, hence low volatility, Bollinger Bands will be in a tight range. This is depicted as narrow "lanes" along chart. As for how we use Bollinger Band theory, here are a couple of guidelines. History shows that a stock usually doesn't stay in a narrow trading range for long, as can be gauged using Bollinger Bands. Strategies include relating width with length of bands. The narrower bands, shorter time it will last. Therefore, when a stock starts to trade within narrow Bollinger Bands, we know that there will be a substantial price fluctuation in near future. However, we do not know which direction stock will move, hence need to use Bollinger Bands strategies together with other technical indicators.
| | Bad debt can really harm your credit historyWritten by Jakob Jelling
While most people use phrase "bad debt" to refer to a lot of debt, or just owing a lot of money, this phrase actually has a very specific use when it comes to financial issues. Bad debt in this case is a debt that cannot be collected. This usually happens when person who owes money goes bankrupt, and does not have ability to pay toward debt.If you are a creditor and person who owes you money declares bankruptcy, this bad debt can be a problem. After all, even though a good deal of remaining estate will be separated out to many different creditors, you will probably not get all of money that you are owed. For this reason, most creditors try to work with debtor in order to make it possible to pay back debt - that way, they'll get all of money back, instead of just a little. If you owe money and you do not believe that you can pay it, it might sound like a good idea to have that debt declared as a bad debt. However, this is not case, as declaring bankruptcy can have lasting effects on your financial situation, whereas being in debt and working to pay off your debts can actually be beneficial in long run.
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