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15. Jun
2012
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There are many different ways of calculating the channel limits. E.g., the channel that is shown above is a Bollinger Band.
The Bollinger Band is an extremely popular channel used in technical analysis, an interesting concept of the Bollinger Band is the inclusion of volatility in its calculation. A technical trader will assume the relation of the price to the channel as an indication of the securities direction. A technical trader will use this information to trade in and out of the market. This is the basis for a channel breakout system.
