[r4bb1t]

as far as i know, most traders prefer EMA (or anything other) than SMA.
but Bollinger Bands used SMA and i never seen Modified BB that usign other moving averages.
is there any special reason that BB should have made with SMA?

[Tams]

Originally Posted by r4bb1t »

as far as i know, most traders prefer EMA (or anything other) than SMA.
but Bollinger Bands used SMA and i never seen Modified BB that usign other moving averages.
is there any special reason that BB should have made with SMA?

John Bollinger explained this in his book "Bollinger on Bollinger Bands".

[Kiwi]

If you think about bollinger bands as a statistical measure of crowd emotion then being the standard deviation over a certain period and given that the simple moving average is actually the moving average it makes sense. Why not use the statistical measures (with the old assumptions that price data can be contained by a Normal curve)?

EMAs and other weighted mas (many of which are not really averages but price filters) are later developments to get a "better" fit or achieve a particular result.

Also, bb's were originally used on daily I believe and you'll see a lot more attention paid to smas than emas up in the multi-day timeframe.

But seeing Tams is being helpful in his inimitable way lets see if I can find my copy of the book. Hmmm you have to go to the history section. To quote: "Trading bands are bands contructed above and below some measure of central tendency." Actually, he doesn't say there why he used smas (he originally didn't use mas at all) but he was using daily data and the majors on daily are the smas (50, 200 and perhaps 20). And at this point my interest in the subject is outweighed by my lack of willingness to spend more time on it.

[JohnathanStein]

Technically, BB's are actually Moving Standard Deviation Bands. Since the SD is originally calculated on the mean (average), you would be mixing mathematical apples and oranges.

If you are numerically literate enough to deduce standard deviation on the numbers 1..5 on a legal pad with a pencil, then you are knowledgable enough to mix stuff up.

I wouldn't, unless I took the time to study and research the subject, like recalculating the SD based on the EMA -- which may not be a good idea, as you'd be mixing descriptive statistics with time series...