Investing With IBD Ep. 333 These Tools Can Help You Trade With Machine-Like Precision
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Aug 13, 2025 
John Bollinger, president of Bollinger Capital Management and inventor of Bollinger Bands, shares his insights on trading with precision. He discusses the emotional pitfalls of trading and the advantages of a mechanical trading system. The conversation dives into mastering volatility, utilizing technical indicators effectively, and introducing the Trident Portfolio Strategy for better diversification. Bollinger also highlights the importance of adapting to market dynamics and the value of analytical tools in deciphering stock volatility.
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How Bollinger Bands Were Invented
- John Bollinger describes copying a volatility formula into a spreadsheet and watching it adapt to market changes.
- That observation led him to create Bollinger Bands by automating band width with standard deviation.
Why Bands Adapt Quickly
- Standard deviation squares deviations so bands expand quickly on large moves and remain narrow on small ones.
- That squaring makes Bollinger Bands highly adaptive to breakouts, breakdowns, and trend changes.
Add On Two-Bar Reversals
- When strong stocks pull back to the lower band, wait for a two-bar reversal to add or re-enter.
- Use a bar that closes outside the lower band followed by one closing back inside as your entry signal.