EURUSD 1.1737 USDJPY 112.00 USDCAD 1.2789 EURCZK 25.547 USDCZK 21.762 EURPLN 4.2294 USDPLN 3.6034
EURUSD 1.1737 USDJPY 112.00 USDCAD 1.2789 EURCZK 25.547 USDCZK 21.762 EURPLN 4.2294 USDPLN 3.6034

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Demo account in MetaTrader 4

Demo account in MetaTrader 4

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For beginners

For beginners

Learn the basics of financial markets

Bollinger bands capture most of the market movement within the two lines reflecting the standard deviation of a price from its average value

Rule of thumb

Bollinger bands set at  a distance of three standard deviations from the market price, will capture almost all closing prices within such a range

Bollinger bands were created in the 1980’s by John Bollinger. Bollinger bands consist of three lines where the middle one is a moving average and the two others on the sides
reflect the volatility of prices, measured by standard deviation.

 

Bollinger bands, John Bollinger, envelopes

 

Prices usually move inside the Bollinger bands, bouncing between them.

 

Interpretation of the Bollinger bands is that prices reaching one of the bands may hint at possible short term trend reversal, as they typically tend to return to the middle values. But, one should be careful when interpreting the Bollinger bands in such a straightforward ways. It is not uncommon to see a price reaching the lower band and continuing its downward trend, or the opposite for upward trends, in the case of significantly strong market movements.

 

How to use it with MetaTrader 5:

  • Go to Insert - Indicators - Trend – Bollinger Bands.
  • Select the average period  (default is 14).
  • Select the number of standard deviations to apply from the average (default is 2).
  • The Bollinger Bands will be created automatically for you by MetaTrader 5 and presented in  a chart with prices.

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