A personal note from John Bollinger "When I started in this business volatility was thought to be a static quantity. Beta, a measure of a stock's volatility in relation to the market, was computed using five years of weekly data and the result was used for a long time thereafter. There simply wasn't any need to recompute it. Option traders estimated volatility by taking half the range of the prior six months and then used that number until forced to change by the market. Of course volatility was dynamic not static, but that was heresy then.
Those were the days of the first microcomputers. CP/M was the operating system and 8,000 bytes of memory cost a few hundred dollars. First we used switches and lights to access our micros, then Teletype machines, TTYs, and finally computer terminals such as the Lear Siegler ADM3. Along with the terminals, came the first spreadsheet programs. Over in Appleland VisiCalc became the killer ap. and CP/M got SuperCalc. It was those early spreadsheets, long before Excel, that allowed me to explore the price structure and discover that volatility was a dynamic quantity, an insight that I employed to solve the problems we were encountering using fixed-width trading bands for market timing. Thus Bollinger Bands were born.
Today everybody acknowledges that volatility is a dynamic quantity and Bollinger Bands are everywhere. There is even academic research into how to forecast volatility-try a search for GARCH on the Internet."
Insiders and experienced traders have long used Bollinger Bands to accurately predict price action. Now -- for the first time ever -- learn to use and apply this extraordinary technique directly from the man who created it. Explained in clear, step-by-step terms discover how to compare price and indicator action and make sound, sensible -- and profitable -- trading decisions. Concise, straightforward and filled with instructive charts and visual aides, this remarkable works is essential reading for all serious traders, regardless of the market condition. Bollinger includes his simple system for implementation - and personal techniques for combining bands and indicators.
