Как Работает Bollinger На Форекс

Bollinger Bands are popular with technical analysts and traders in all markets, including forex. Since traders of currencies look for incremental price moves for profit, recognizing volatility and trend changes quickly is essential to having a successful strategy that will net profits.

Forex trading is one of the most prevalent trading markets in the world, with much more activity than the stock market itself. The premise lies in taking advantage of the slight changes in exchange rates, which allows a trader to generate profits by buying and selling different currencies at a beneficial point in price. The theory works the same as trading any asset. If a trader expects the price of a currency to go up, they will buy the currency. If they expect the price of the currency to go down, they will sell the currency.

Bollinger Bands

Bollinger Bands are a form of technical analysis that traders use to plot trend lines that are two standard deviations away from the simple moving average price of a security. The goal is to help a trader know when to enter or exit a position by identifying when an asset has been overbought or oversold. Bollinger Bands were designed by John Bollinger.

Bollinger Bands help by signaling changes in volatility. For generally steady ranges of a security, such as many currency pairs, Bollinger Bands act as relatively clear signals for buying and selling. This can result in stop-outs and frustrating losses, though, so traders consider other factors when placing trades in relation to the Bollinger Bands.

Setting Limits

First, a trader must understand how Bollinger Bands are set up. There is an upper and lower band, each set at a distance of two standard deviations from the security's period simple moving average. Therefore, the Bands show the volatility of the price in relation to the average, and traders can expect movements in price anywhere between the two bands. Forex traders can use the bands to place sell orders at the upper band limit and buy orders at the lower band limit. This strategy works well with currencies that follow a range pattern, but it can be costly to a trader if a breakout occurs.

Reading Volatility

Since Bollinger Bands measure deviation from the average, they react and change shape when price fluctuations increase or decrease. Increased volatility is nearly always a sign that new normals will be set, and traders can capitalize using Bollinger Bands. When the Bollinger Bands converge on the moving average, indicating lower price volatility, it is known as "the Squeeze." This is one of the most reliable signals given by Bollinger Bands, and it works well with forex trading. A Squeeze was seen in the USD/JPY currency pair on Oct. 31, News that the Bank of Japan would be increasing its stimulus bond-buying policy sparked the trend change. Even if a trader did not hear about this news, the trend change could be spotted with the Bollinger Band Squeeze.

Backup Plans

Sometimes reactions are not as intense, and traders can miss profits by setting orders directly on the upper and lower Bollinger Bands. Therefore, it is wise to determine entry and exit points near these lines to avoid disappointment. Another forex trading strategy to work around this is to add a second set of Bollinger Bands placed only one standard deviation from the moving average, creating upper and lower channels. Then, buy orders are placed within the lower zone and sell orders in the upper zone, increasing execution probability.

There are several other specific strategies used in currency trading with Bollinger Bands, such as the Inside Day Bollinger Band Turn Trade and the Pure Fade Trade. In theory, these are all profitable trades, but traders must develop and follow the methods exactly in order for them to pan out.

The Bottom Line

Bollinger Bands can be a useful tool for traders in assessing the volatility of their position, providing them with insight on when to enter and exit a position. For forex traders, certain aspects of Bollinger Bands, such as the Squeeze, work well for currency trading, as does adding a second set of Bollinger Bands. Using this tool correctly can help investors and traders make better decisions and hopefully earn profits.

Definition

Bollinger Bands %B or Percent Bandwidth (%B) is an indicator derived from the standard Bollinger Bands (BB) indicator. Bollinger Bands are a volatility indicator which creates a band of three lines which are plotted in relation to a security's price. The Middle Line is typically a 20 Day Simple Moving Average. The Upper and Lower Bands are typically 2 standard deviations above and below the SMA (Middle Line). What the %B indicator does is quantify or display where price is in relation to the bands. %B can be useful in identifying trends and trading signals.

History

The creator of Bollinger Bands (BB), John Bollinger, introduced %B in almost 3 decades after the introduction of his Bollinger Bands.

Calculation

The basics

It is all about the relationship between price and the Upper and Lower Bands. There are six basic relationships that can be quantified.

In descending order from the Upper Band:

1. %B Above 1 = Price is Above the Upper Band
2. %B Equal to 1 = Price is at the Upper Band
3. %B Above = Price is Above the Middle Line
4. %B Below = Price is Below the Middle Line
5. %B Equal to 0 = Price is at the Lower Band
6. %B Below 0 = Price is Below the Lower Band

Generally speaking and are also relevant levels.

1. %B Above = Price is Nearing the Upper Band
2. %B Below = Price is Nearing the Lower Band

%B goes beyond just a visual inspection of price in relation to its location within Bollinger Bands (BB). It is a way of pinpointing its location and providing the technical analyst an exact value.

What to look for

Overbought/Oversold

It is typically best to look for trading signals generated by the %B during strong or clearly defined uptrends or downtrends. "Walking the Bands" is a situation when during a strong uptrend or downtrend, price frequently breaks through above the Upper Band (in an uptrend) or below the Lower Band (in a downtrend). When price is "Walking the Bands" these breakthroughs are not actual reversal signals. Price may indeed reverse somewhat but it often turns once again and resumes the overall trend.

Identifying when a Breakthrough signifies an actual trend reversal can be a difficult event pinpoint. This is mostly done through historical technical analysis and research. That being said, using %B to identify trading signals due to Overbought/Oversold conditions while staying within the overall trend is a little bit more straightforward.

Notice on the following chart:

• The general trend is moving upwards.
• %B moves above 1 several times. This indicates that price has broken through the Upper Band.
• There are indeed slight reversals with price moving back towards the SMA (The Middle Line)and %B moving towards
• However %B never breaks through 0. Price then rises and the uptrend continues.

Trading Signals can also be found using the same principles. Opportunities to trade with the trend can present themselves when Breakthroughs occur in the opposite direction of the underlying trend.

Notice on the following chart:

• The general trend is moving upwards.
• %B breaks through below 0 several times.
• These Breakthroughs present buying opportunities.

Notice on the following chart:

• The general trend is moving downwards.
• %B Breaks through above 1 several times.
• These Breakthroughs present selling opportunities.

Summary

What makes Bollinger Bands %B useful, is that it takes a very popular, well-known indicator (Bollinger Bands (BB)) and narrows the focus. Instead of relying on the appearance of prices in relation to the Bands, technical analysts can use exact values to help make more informed decisions. %B is at its most valuable during a well-defined trend. During a well-defined trend, breaks above 1 and below 0 become much more significant. Therefore %B should be used in conjunction with additional indicators or technical analysis methods to help confirm over trend direction.

Inputs

Length

The time period to be used in calculating the SMA which creates the base for the Upper and Lower Bands. 20 days is the default.

Source

Determines what data from each bar will be used in calculations. Close is the default.

StdDev

The number of Standard Deviations away from the SMA that the Upper and Lower Bands should be. 2 is the default.

Style

Bollinger Bands %B

Can toggle the visibility of Bollinger Bands %B as well as the visibility of a price line showing the actual current value of the Bollinger Bands %B. Can also select the Bollinger Bands %B line’s color, line thickness and visual type (Line is the default).

Overbought

Can toggle the visibility of a line indicating overbought levels. Can also select the line’s value, line thickness, value and visual type (dashes is the default).

Oversold

Can toggle the visibility of a line indicating oversold levels. Can also select the line’s value, line thickness, value and visual type (dashes is the default).

Precision

Sets the number of decimal places to be left on the indicator's value before rounding up. The higher this number, the more decimal points will be on the indicator's value.