Bollinger Band Strategy For Binary Options

Today we volition not only talk almost one of the indicators but also propose specific signals that y’all can implement in the Bollinger Bands strategy. Bollinger bands are used to measure volatility relative to the moving average. They consist of ii lines that run on either side of a 20 elementary moving average. As the gap between the bands widens, the higher the volatility and vice-versa.

In this guide, I’ll teach you, how to set upwards Bollinger Bands on the IQ Option platform. Next, I’ll prove you lot how to read Bollinger Bands to determine the best trade entry points.

Bollinger Bands Indicator overview

In order to exist able to create a Bollinger Bands strategy it is very important that you lot have a good agreement of the construction and performance of the indicator.
Bollinger Bands
are created by two bands (lines) that run on either side of a SMA20 line. This indicator is used to measure market volatility. Every bit such, they can be used to help yous predict the all-time merchandise entry points.

The iii lines of the Bollinger Bands indicator are equally follows:

The
upper band
is equal to the SMA20 added to twice the 20 day standard deviation of the toll.

The
lower band
is equal to the SMA20 minus twice the xx-day standard deviation of the cost.

The
center band
is the xx day elementary moving average.

How do you add Bollinger Bands when you’re trading?

After logging into your trading business relationship and setting upward your chart, click on the indicators feature ad select volatility. Next, select Bollinger bands.

Click on the Setup and apply tab on the Bollinger bands window.

Set the period to 20. Finally, click Apply to salve the changes.

How exercise yous use Bollinger Bands effectively?

Bounces from the upper and lower Bollinger Bands

Since the indicator forms a band in which the cost moves, it seems quite reasonable to trade inside this ring. So the easiest signals are when the price reaches the upper or lower band. If the price reaches the upper band we get ready to sell, if information technology reaches the lower band we get gear up to open a buy position. With merely these two uncomplicated signals you tin can create a Bollinger Bands strategy.

However, many signals will create loss-making positions. Just look at the chart below and you lot volition encounter that with a dynamic price motion, information technology tin reach the bottom band and go on its downward motion. Or information technology can chop-chop achieve the upper band and not end in that location at all.

Is Bollinger Ring effective?

Looking at the graph above, ane might think that this efficiency varies. So how to make the mentioned Bollinger Bands signals more constructive?

First, you can wait for additional confirmation, such as the advent of a reversal candlestick pattern on the lower or upper ring. Secondly, you tin can filter trend signals and but open positions that follow the direction of the long-term trend as determined past the EMA200, for instance.

Information technology is besides possible to change the width of the band. How do I change the Bollinger Band Width? Simply change the difference parameter from two to 3 or higher. On the chart beneath you lot tin see that this process volition reduce the number of signals and better their quality or effectiveness. The white lines are the ribbon with the deviation parameter ready to 3.

Breakthroughs of the upper and lower Bollinger Bands

The next 2 signals volition exist in opposition to the previous ones. I would suggest using them in highly volatile markets. Cryptocurrencies, for example, are such a market. I would like you to kickoff thinking like a speculator yourself while reading this commodity about edifice Bollinger Bands strategy. Sometimes you just need to await for methods or tricks that will improve the tools you apply. Such a trick tin even exist the right choice of the market.

A buy signal occurs when the candle closes above the upper band. A sell signal occurs when the candle closes below the lower band. Uncomplicated, isn’t it? I have shown 2 such entries on the BTC chart below. As an addition, which I highly recommend, I have also included hither the long term EMA200. It is supposed to filter trades past defining the trend. Thus, I can accept purchase positions provided that the shut of the indicate candle is above the EMA200, and short positions below the EMA200.

Summary of today’due south Bollinger Bands strategy

As you tin meet simple rules can create a working strategy that you can successfully use to trade CFDs or digital and binary options on IQ Pick. I would add that although these signals contradict each other, by adding the aforementioned EMA200 every bit a filter, you lot tin can utilize all 4 simultaneously taking into business relationship the current market situation and long-term trend. Such a strategy has a skillful chance of success regardless of trading manner. It is suitable for day trading and scalping but besides swing trading.

Now that you’ve learned how to trade Bollinger Bands strategy on IQ Option, go ahead and try this indicator on your IQ Choice trading business relationship. Please share your findings in the comments section below.

Practiced luck