It results from moving averages plus standard deviation that is further multiplied by a factor, commonly two. This line shows the upper end of the predicted price range. Also, it works as a strong resistance. This line represents the lower end of the predicted price range of an asset. It acts as strong support in the chart.

It is formed as a result of standard deviation minus moving average. The sum is further multiplied by a factor. This line is also termed as the main line.

The interesting thing about the middle line is that it becomes resistance when the market is trading above. Similarly, it becomes support when the market is trading below. So, you can conclude that Bollinger Bands help traders know the right time when they should enter and exit the market. The suggested time is when risk is limited, and profit is more.

Now, in this situation, after a sudden price move, only a few people will show interest in that commodity. In this situation, more people will show an interest in the item.

The above example tells that sudden change in the price, whether increasing or decreasing, can create a market imbalance. Now, the role of Bollinger Band here is that it reflects the assumption. That means this indicator adapts to the dynamic price change. Then it forms three lines. The middle line indicates long-term price change. Similarly, the other two lines show price fluctuations. Now, if the price of the commodity moves downwards , it means the item is getting cheap.

Long story short, with the help of Bollinger Bands, you can easily understand the market psychology and place winning trades. The reason that Bollinger Bands is getting popular among traders is that it has simple concepts. Unlike other complicated technical trading tools, this one does not require you to have detailed market knowledge.

Simply by analyzing whether the market asset is overbought or oversold, this tool can help you. Similarly, if it moves closer to the downward band, it indicates oversold.

Also, if the overbought and oversold actions are limited and the market is less volatile, then the band contracts. And the band widens if the market gets highly volatile. Squeeze is a situation in Bollinger Bands that arises when the bands come too close. Squeezing in the trading market also indicates limited volatility. Now, this situation is both profitable and risky. Several traders like to enter the market during this situation as it helps them win a better payout.

Instead of moving close, if the band moves far, volatility gets limited. But trading opportunities do not decrease. However, noticing this chance is really very difficult as the band does not give any signal. Another common occurrence in Bollinger Bands is breakouts. It takes place when the price movement happens between two bands. That means one must trade during breakouts using the Bollinger Bands strategy at their own risk. Calculating Bollinger Bands data is rather simple than complicated.

The formulas and theories might feel like a little too much, but everything is easy to understand. For the calculation, you need to check the moving average of 20 days.

Here, the closing prices are termed as the first data point. Similarly, the next data point to the earliest price drop, i. If you want to win a better payout, you must use Bollinger Bands trading strategy in three ways , i. A bullish breakout is formed when the market price closes above the upper line in Bollinger.

Similarly, during a bearish breakout, the price closes below the lower line. Lastly, during the range market, the price stays inside the range. Using Bollinger Bands strategy can help you make more profit.

The derived predictions can further be used with binary options like one-touch options and ladder options. You can identify more trading opportunities while using Bollinger Bands because this strategy shows how the trading market behaves. Not only can you identify better trading opportunities, but you can also avoid bad trades.

Once you understand how the bands work and what they indicate, you can save yourself from losing money. Lastly, trading binary options using Bollinger Bands is simple because this tool can quickly analyze the market.

That means one can do an overall binary market analysis in just a few seconds. Just like any other trading tool, this one also has certain limitations. In our case, the building of working template is very simple. But you will certainly need a trading platform that allows you to apply the set of used technical tools of this strategy to quotes of a traded asset and, accordingly, also allows you to reconfigure them properly. After all, the loss of each item can lead to the loss for the trader.

In this article, we will use the Binomo trading platform that best meets the specified requirements. When observing the asset chart, you should wait, when the quotes will touch one of the BB channel walls, and be sure to receive confirmation signals from the oscillatory instruments.

Then, you need to open a trading lot in the direction of the rebound of the price from the border of the corridor. Applying the 15s timeframe to conduct a thorough market analysis as part of the strategy, the expiration date for trading lots should be set in the range from 1 to 3 minutes.

At the same time, it is not forbidden at all to trade within the system and on higher timeframes, but do not forget that it will be necessary to calculate the expiration period additionally for other intervals. By the way, the Binomo broker has the smallest option transaction worth only 1 USD. Save my name, email, and website in this browser for the next time I comment.

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FOREX BROKER. LEARN TRADING. ABOUT US. Forex School. Day Trading Strategy. Binary Options. Options Trading. Forex Analysis. Stock Analysis. Binary Options » Bollinger Bands. Below we will explain three strategies which you can use on any time frame along with oscillators. Bollinger bands looks like a channel with a middle band; works as an excellent volatility indicator.

The middle band is more like a pivotal point. There are plenty of oscillators available. You can choose anything you like, in this case, we have used MACD Moving average convergence divergence. MACD adds extra confirmation on trade signal along with Bollinger band. When the market price as a candlestick or a bar form closes above the upper Bollinger band on the chart, then it is considered as a bullish breakout.

In the case of binary options trading, you can place call order or rise order when such signal occurs. Trade duration depends on the time frame which you will use. As we have mentioned about MACD has to be following the same signal. With the example below, see with the trend indicator dashboard for USDCAD, Bollinger band showing bullish breakout signal along MACD both bullish signals. So it is possible to place a call option for 15 minutes.

But note, activating this option will decrease your amount of profit return percentage a little bit. As long as candlesticks are closing above the Bollinger band upper line, the market indicates a bullish trend. When the market price as a candlestick or a bar form closes below the lower Bollinger band, then this indicates a bearish breakout. In case of binary options trading, you can place put order or fall order when such signal occurs.

Trade duration is the same as before based on the selected time frame of the chart. As the trade signal is on the daily chart. So we can choose the trade duration of 24 hours or 48 hours depending on the volatility. As long as candlesticks are closing below the Bollinger band lower line, it stays bearish. When the bar closes above the lower Bollinger band, the bearish trend becomes weak. Trade duration is the same as before, matched it with the chart time frame.

If you use 5 minutes chart for analyzing the chart, then binary options trade duration should be between minutes. In the picture above, we have marked two arrows where we find the highest top in the range and the lowest low.

Also, notice price is not breaking the lower Bollinger band or the upper Bollinger band. It is an oscillator widely used in technical analysis for trend confirmation. We have marked all 3 trade best signals on the chart. If you place a trade, that EURUSD will rise or fall for the next 30 minutes.

Then with these 3 trades, you could have won positively. The above statement might sound like hindsight trading.

But in reality, it is not. Cause if you have noticed the wave pattern, then these 3 trades can be easily explained. Here you can see that after a range movement, the market has expanded toward downtrend. Bar closes above the Bollinger band. Bar closes above Bollinger band upper level. MACD is also agreeing with it.

you might find lots of Bollinger band breakout but none of them are creating any new high or new low. Rather staying inside a range. As a result, we are no longer trading. Our 3 best trade is done. Metatrader is a free charting software and spot trading platform.

You can use this software to load IntraQuotes premium Indicator. The main benefit of using this indicator is it automatically scans for Bollinger band signals among multiple currency pairs or instruments.

Trend Dashboard Indicator. See with the above picture, we can see signals with EURGBP, AUDJPY, AUDCHF. So we can place sell order with binary options with 5 minutes expiry. For buying binary options we had USDCAD,GBPAUD. In order to use MetaTrader, you need to have a demo forex trading account. You can open find different forex brokers with demo account facility with link below.

Like all types of trading, the basic rule is, do not risk too much. Binary Demo Account. Higher Lower. Last updated on December 1, by Somsri Sarkar. This site uses Akismet to reduce spam. Learn how your comment data is processed. FOREX BROKER Forex Cashback Forex Brokers Forex Bonus. Calculator Products. TRADING TOPICS Forex School Day Trading Strategy Binary Options Options Trading Metatrader.

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Instead of moving close, if the band moves far, volatility gets limited. The length of the moving average is usually 20 days or less. The Parameters The length of the moving average is usually 20 days or less. That means this indicator adapts to the dynamic price change. Also, to get better results, you can use Bollinger Bands with some of the leading brokers like Quotex, IQ Option, Binary.

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