Bollinger Bands is a tool invented by John Bollinger in the 1980s as well as a term trademarked by him in 2011. Having evolved from the concept of trading bands, Bollinger Bands and the related indicators %b and bandwidth can be used to measure the “highness” or “lowness” of the price relative to previous trades. Bollinger Bands are a volatility indicator similar to the Keltner channel.
Bollinger Bands consist of:
- an N-period moving average (MA)
- an upper band at K times an N-period standard deviation above the moving average (MA + Kσ)
- a lower band at K times an N-period standard deviation below the moving average (MA − Kσ)
The indicator provided in this post, is a configured version of the BB and it is shown differently than the original one.
How to trade with Bollinger Bands Stop indicator
BBands_Stop indicator trading:
Buy when a red dot changes to green, Sell when a green dot changes to red.
Use BBands_Stop to trail your stops. Just play with indicator settings to define the best inputs for your trading. The one seen on the chart above uses length 9, deviation 2.0.
Download indicator: Bollinger bands stop MT4