The Bollinger Bands is the indicator that measures the volatility of a financial instrument with respect to the moving average. A common short name is B-Bands. There are three lines that form the B-Bands. A simple moving average with a period of 20 moves in the middle and the two lines around it to create the bands. The wider the corridor between them, the greater volatility.
Today, I will not only show you how to add the Bollinger Bands indicator to your chart on the Binomo platform but also explain how to use it to increase your trades’ success rate.
The Bollinger Bands review
Below you can see an exemplary chart with the Bollinger Bands indicator added. There is the SMA20 running in the middle and the lower and upper band around it. Based on this indicator you can recognize the degree of volatility of the market. As a consequence you can identify the best entry points for your transactions.
Those three lines that create the B-Bands tool are:
- The 20-day simple moving average which runs in the middle;
- The SMA20’s value minus 2 standard deviations of a price forms the lower band;
- The SMA20’s value plus 2 standard deviations of a price is the upper band.
Adding the Bollinger Bands to a chart on Binomo
Log in to your Binomo platform. Choose the financial instrument you are going to trade and set the type of a chart. Now hit the “Chart preferences” button. You will find the Bollinger Bands under the “Indicators” tab. Select its name and then you will be able to adjust the settings.
The type of the moving average should be set to “Simple”, the period to 20 and the standard deviation to 2. You can change the color as you like. There is an additional field “Channel fill” which, if checked, fills the space between the bands with color.
How to use the Bollinger Bands to trade on the Binomo platform
Using the Bollinger Bands indicator on the Binomo platform is not very complicated. All you have to do is to watch the bands of the indicator carefully. The points of your interest are the points where the price cuts the bands through.
You should open a buy position whenever the price reaches the lower band of the Bollinger Bands.
Whenever the price meets the upper band of the indicator, you get the signal to open a sell position.
Mind that the B-Bands indicator provides the best results for short-lasting positions trading.
As always, I recommend checking how the Bollinger Bands indicator works on the Binomo demo account. You do not risk your own money there so you can peacefully and calmly try different entry points and strategies. Once you get a grip of using the B-Bands, move onto the real account with real money. Do not forget to leave a comment on the Bollinger Bands indicator in the comment section down below the site.
Best of luck!