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Bollinger Bands Width is one of the indicators that go really well with the Bollinger Bands Indicator. This indicator is made from substantial components of the Bollinger Bands Indicator.
Understanding Bollinger Bands Width
Bollinger Bands Width is also known as the percentage bandwidth. It is a derivate Indicator derived from the Bollinger Band. via this indicator, you can understand the key information regarding the volatility of the price by measuring the distance between the upper band and lower band. A high Bollinger Bands width indicates high volatility suggesting better buying and selling opportunities and vice versa A low Bollinger Bands Width indicates low volatility suggesting sideways movement.
This indicator is the difference between the upper band and lower band divided by the Median band multiplied by 100.
The formula for Bollinger Bands Width is: Upper Band – Lower Band / Median band * 100.
In case You don’t know
The Bollinger Bands is one of the most popular trend indicators developed by John Bollinger in the 1980s. This indicator is made from the composition of two standard deviations above and below the SMA (Simple Moving Average ) line. via this indicator, you can identify both the volatility and oversold or overbought levels.
When the price moves near the lower band it suggests that the market is at an oversold level and vice versa When the price moves near the upper band it suggests that the market is at an overbought level.
Apply Bollinger Bands Width on Pocket Option
a. Login to your Pocket Option chart
b. Select the desired trading asset you want to trade
c. Change the default chart to candlestick
d. Click on the indicator button from the left-hand bottom of the page. and click on the Bollinger Bands Width name from the list.
e. Now, apply the necessary changes such as indicator colour and period.
f. Once, you are done click apply.
How to trade with the combination of Bollinger Bands and Bollinger Bands width?
Bollinger Bands and Bollinger Bands width complement each other very well. So, open your Pocket Option chart first and apply both indicators in the chart.
The default period of the Bollinger Band indicator is 5 and 1. However, I will suggest you increase the same to 20 and 2 this will give you better insights about the price.
When both indicators suggest the overbought level. It signals a strong upcoming bearish trend you can place a sell trade here.
Similarly, When both indicators suggest the oversold level. It signals a strong upcoming bullish trend and you can place a buy trade here.
The best time to place a buy and sell trade is when you see a big distance between the upper band and lower band. You should avoid placing calls when you a see small distance between the two bands. I will highly suggest you try the indicator on the Pocket Option demo account here, you will get $10,000 in virtual currency and once you are confident enough you shift to the Pocket Option real account.