indicator Better Bollinger Bands is not just a modification of the standard Bollinger Band indicatorbut is calculated using a completely different formula.
The Better Bollinger Bands indicator displays a dynamic channel built on changes in volatility. When the volatility level decreases, the width of the channel also narrows, so a sharp breach of the channel border is regarded as the beginning of a new movement.
Better Bollinger Bands indicator settings
- Periods - period of the moving average, which is the middle line of the channel;
- Devs - the channel width coefficient;
- Price - the price at which the indicator is calculated:
- 0 - closing price (Close),
- 1 - opening price (Open),
- 2 - maximum price (High),
- 3 - minimum price (Low),
- 4 - average price, (High+Low)/2,
- 5 - typical price, (High+Low+Close)/3,
- 6 - weighted closing price, (High+Low+Close+Close)/4.
Application in trade
Better Bollinger Bands indicator will help to determine the current trend, the level of volatility prices and, according to ForTrader.org experts, can be applied in two ways:
- A variant of trend trading is selling and buying when the price rebounds from the upper and lower limit of the channel, respectively. However, due to the fact that the channel is dynamic, due to its constant changes, there may be problems when trading using pending orders.
- Option to open a position at a sharp breakdown of one of the borders of the channel, after its narrowing. The deal is opened in the direction of the breakdown, stop-loss is set on the opposite border of the channel.