The Bollinger Band is one of the popular gems in trading that was developed by John Bollinger in the 1980s for trading stocks. It is a trend indicator that helps us to identify the upcoming trends and reversals. However, I personally believe that the Bollinger Band is not just an indicator. It is a trading system that not only allows us to find upcoming trends and reversals but also the strength of that trend. In this article, I will cover everything about the Bollinger Band and how you can use the trading system on the Binomo trading platform.
What are Bollinger Band?
Bollinger band is a trend indicator aka trading system that not only helps us to check the upcoming trends and reversals but also helps in verifying the strength of the trend using the support and resistance level. You can even use this indicator to identify the volatility of the security which I am going to cover in the further article.
This indicator uses three lines named upper band, middle band and lower band. The price of security ribbons around these three lines and via this you can identify the trends and reversals of security. The upper band act as the resistance level and the lower band act as the support level. This indicator is made from the composition of the 20-period simple moving average and the standard deviation of period 2.
How to insert Bollinger Band on the Binomo trading platform?
Step 2: Once, you logged in click you will land on the Binomo trading dashboard. Now, click on the indicator button from the left-hand corner and search and select the Bollinger Band from the menu.
Step 3: Now, configure the indicator as per your requirements and you can even change the period of the indicator.
Find signals with Bollinger Band
Trading and finding signals with Bollinger Band is very simple and easy. when the price or candle is touching the upper band consider placing a sell trade and conversely, when the price is touching the lower band consider placing a buy trade.
Now, talking about the midline when the price is touching the midline from the top it signals a bearish trend and you can place a 1-minute sell trade and conversely when the price is touching the midline from the bottom consider placing 1-minute buy trade as it signals a bullish trend.
Check the Volatility of security using Bollinger Band
You can easily check the volatility of a security using the Bollinger Bands. In order, to check the volatility of a security using the indicator you need to check the distance between the upper band and the lower band. When the distance between the upper and lower band is quite high it signals a high volatility and conversely, when the distance between the upper and lower band is small it signals a low volatility.
Another way to measure security volatility is by looking for the squeeze. A squeeze occurs when the price and the indicator bands narrow to a historically low level this indicates that the security price is about to experience a significant price move and later it is likely to be followed by a period of higher volatility. Traders may look for a breakout above the upper band or below the lower band as a signal to enter a trade.
Bollinger band is a popular gem in trading. Traders all around the globe love this indicator as it not only helps to spot trends and reversals but also helps to verify the strength of that trends. You can easily identify the trends using the support and resistance level. when the price touches the resistance level or upper band you can consider placing a sell trade conversely, when the price touches the support level or lower band you can consider placing a buy trade. You can also find of volatility of security using the indicator when the distance between the upper and lower band is quite high it signals a high volatility and conversely, when the distance between the upper and lower band is small it signals a low volatility. I hope you have understood the concept now it’s your job to use this indicator on the Binomo trading platform and earn bucks with the strategy.
I wish you a very best of luck 😉