Bollinger Bandwidth Indicator

Bollinger Bandwidth Indicator

The Bollinger Bandwidth Indicator For MT5 measures volatility and helps forex traders anticipate big price moves

The Bollinger Bands Indicator for MT5 measures the difference between the outer bands of the classic Bollinger Bands indicator. The width of the Bollinger Bands increases when the price is volatile and decreases when the volatility is low. As a result, the Bollinger Band Width indicator also increases in value when volatility is high and decreases when volatility is low. As a rule, the indicator is built in a separate indicator window as an oscillator.

If the Bollinger Bands are narrowing, this indicates an upcoming volatile price movement. Similarly, if the Bollinger Bandwidth indicator decreases and stays the same, it indicates an upcoming price move. Thus, forex traders can buy or sell depending on bullish or bearish market conditions.

The indicator works well on all intraday price charts as well as daily, weekly and monthly price charts. Thus, it allows swing traders and scalpers to trade using this indicator. In addition, the indicator can be used by both new and experienced forex traders. Forex traders should keep in mind that the indicator does not indicate the direction of the market, but warns of the upcoming market movement. Thus, novice forex traders should use other indicators to confirm the direction of the trend.

Bollinger Bandwidth Indicator For MT5 Trade Setup

The above AUDUSD H1 price chart shows the Bollinger Bandwidth Indicator for MT5 in action. The indicator displays values as an oscillator with a purple line.

Bollinger Band Width helps you anticipate market volatility. John Bollinger suggests that prices will change significantly after a period of low volatility. So, if traders spot a period of lower oscillator readings, it indicates that the markets are looking for direction for the next big move. Traders must use price action to confirm the direction of the market and trade in line with the direction of the market.

The next method is to identify patterns such as a double bottom or double top in an oscillator. If a double top is identified, forex traders can open a sell position with a stop loss above the top. Similarly, if a double bottom is found, traders can place a buy trade. The indicator does not provide a profit target, so traders should exit based on the risk/reward ratio.

Another trading strategy is to look for divergence in the oscillator window and anticipate price action. While forex traders may plot trendlines on an oscillator line, a breakout of these trendlines does not determine the direction of the market. However, these lines can determine whether volatility is decreasing or increasing. An increase in volatility always opens up trading opportunities.

Conclusion
The Bollinger Bands Indicator For MT5 supports forex traders using the classic Bollinger Bands indicator by providing a measure of volatility. However, traders should be aware that the indicator does not provide trading signals or trend direction. In addition, traders can download the indicator for free and install it easily.