There are many technical indicators available on the Binomo platform. Their purpose is to simplify the trading process for you. The indicators produce signals for opening the trading position. This article explains how the Bollinger Bands indicator works.
The Bollinger Bands indicator basics
The Bollinger Bands indicator consists of three lines which are based on simple moving average with a defined period. The bands are presenting the price movement range. The mathematical calculations for the range expanse are made upon the formula of standard deviation.
You have the possibility of changing the indicator’s parameters. When you choose a higher coefficient, the space between the bands of the indicator will widen. At the same time, the price bars are less likely to reach the borders.
The number of candles that are used for the Bollinger Bands calculations is defined by its period. When you decide to set a higher value for the indicator’s period, the corridor will be smoother. Nevertheless, the higher period does not improve the Bollinger Bands efficiency.
Using Bollinger Bands in trading on Binomo
You look for the moments when the price bars reach the borders of the indicator. Such a situation is a signal of a change in the direction of the price.
When the price breaks through the lower or upper band, you may expect the trend will continue its direction for some more time.
The width of the channel gives information about market volatility. The corridor expands together with increasing volatility.
The trading signals based on the Bollinger Bands indicator itself are less accurate when the trend grows in strength. That is why it might be a good idea to combine the Bollinger Bands with other technical analysis tools. It works well with the Relative Strength Index, for instance.
The Bollinger Bands is a popular indicator offered on the Binomo platform. It gives the signals to open the trading positions. It works perfectly in combinations with other indicators.
You may want to read more about the Bollinger Bands. Check the following article about the basics of the Bollinger Bands indicator.
Practice using the Bollinger Bands in trading on the free Binomo demo account. This is an excellent place for your training. Once you get hold of the B-Bands, move on to the live account and start making money.
Wish you a pleasant experience with Binomo!
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