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Bollinger bands for MT4 are a reliable indicator that can provide trend-following trading signals and price reversal forex trading BUY or SELL signals. The indicator also helps forex traders to track and ride price trends.
This indicator is suitable for both new and experienced forex traders. It allows them to quickly understand the trend, price momentum, and volatility.
Advanced forex traders can also use it with other trend-following indicators to create complicated trading strategies. Automated software often uses Bollinger bands trading signals as the indicator works on a simple formula.
This indicator is available in all time frames for intraday charts as well as daily, weekly and monthly price charts. Forex traders can use it to trade multi-timeframe forex trading strategies.
They can identify the BULLISH and BEARISH price trends in longer time frames and determine the best BUY or SELL entry points in shorter time frames.
Bollinger Bands Mt4 Indicator Signals
The Bollinger Bands indicator for MT4 is shown in action in the AUDUSD 30M price graph. The indicator plots the outer bands in Tomato, and the midline in Dodger Blue. The middleline is the moving average. The outer bands are the standard deviation. Forex traders can use the Bollinger Bands to trade in a variety of ways.
If the price bounces off the upper bands, it is a sign of a reversal. Forex traders can place an SELL trade to target the opposite bands and a stop loss at the previous swing high.
If the price breaks out of the bands and maintains momentum, the trend will continue. Forex traders should therefore place a BUY order with a stop at either the lower or midline bands. Similarly, if price breaks down along the lower band and continues with the bands, forex traders can SELL to ride the trend continuation.
The current market volatility is indicated by the distance between the Bollinger bands. A wider band means that there has been more price movement and greater market volatility.
Conversely, a smaller band can indicate very little market movement or volatility as they squeeze. This is usually followed by a sudden market move, which could be either in a BEARISH (or BULLISH) direction.
To confirm trend reversals, some technical forex traders use multiple bands at the midline. Additionally, Bollinger bands-equipped oscillators improve the quality and accuracy of technical analysis.
Conclusion
Bollinger Bands indicator for MT4 can be traded by forex traders in many ways. Many forex auto trading software uses the Bollinger band indicator and incorporates it in complex technical trading strategies.
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