There are many technical indicators available on the Binomo platform. Their purpose is to simplify trading process for you. Some of these indicators generate signals to open a 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 a simple moving average for a defined period. The bands represent a movement range of a price. The underlying mathematical calculations for the range expanse are made using 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, a higher period does not improve the Bollinger Bands efficiency.
Using Bollinger Bands in trading on Binomo
You need to look out for the moments when price bars reach the borders of the indicator. Such a situation would be 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 to continue its direction for some time more.
The width of the channel gives information about market volatility. The corridor expands together with increasing volatility.
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.
Bollinger Bands is a popular indicator offered on the Binomo platform. It is capable of giving signals to open trading positions. It works perfectly in combination with other indicators.
You may want to read more about Bollinger Bands. Check out the following article about the basics of Bollinger Bands indicator.
Practice using Bollinger Bands in trading on the free Binomo demo account. This is an excellent place for you to train and learn how to incorporate financial indicators into your trading. Once you get hold of the B-Bands, move on to the live account and take the opportunity to make a monetary return.
Wish you a pleasant experience with Binomo!