Advantages and disadvantages of the famous Bollinger Bands indicator

Advantages

• Bollinger Bands are visually easy to interpret
• They can be used both as a volatility indicator and a momentum oscillator
• Bollinger Bands can be applied on any underlying asset across any time frame
• The indicator generates signals that not only provide precise entry levels, but also specify stop loss and take-profit zones

Disadvantages

• Bollinger Bands work better in sideways markets than in trending markets
• While it is possible to identify extreme price readings with Bollinger Bands, they are not ideal for this purpose
• Even though Bollinger Bands can trigger their own signals, it is important to use these signals in concurrence with other aspects of technical analysis

Wrap Up

Just like any technical indicator, using Bollinger Band signals in isolation might prove disadvantageous.  Always consider the underlying trend in price, and the presence of nearby support-resistance zones, before forming a market bias.