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Bollinger Bandwidth Indicator Trading Strategy

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  • First Post: Jul 5, 2020 6:06am Jul 5, 2020 6:06am
Hey team,

I recently re-read John Bollinger's book - Bollinger on Bollinger Bands and I really liked the idea of the Bandwidth indicator.

The bandwidth indicator looks at the difference in pips between the upper and lower BB and the lower the difference signifies a period of low volatility (also known as the BB squeeze). John Bollinger suggested that periods of low volatility is followed by a period of high volatility (breakout).

There are a number of Bandwidth indicators on this forum and I've modfied one to provide an alert (on chart and push) when the Bandwidth indicator drops below a certain pip value (user defined) for 2 consecutive bars.

Here are a couple of examples

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot1.png Size: 74 KB


In the above chart the Bandwidth indicator dropped to 2 pips (yellow area) which was followed by a 45 pip move

Attached Image (click to enlarge)
Click to Enlarge Name: Image1.png Size: 81 KB


In the above chart we had two signals. The first (1) led to a 100 pip move and the second (2) was followed by a 95 pip move.

Hopefully you guys can see the potential power with this indicator.

Here is a video of the input settings and more examples of the indicator in action.

Inserted Video


The indicator is not a directional indicator but more of an early warning signal a big move is about to occur. Combine it with higher time frame analysis and you can have a great strategy. I've provided the MQ4 file as I know that the great coders on here will add some great features to make this indicator better.

Attached File(s)
File Type: mq4 OGT Bollinger Bandwidth Indicator v1.0.mq4   10 KB | 2,828 downloads
Never stop investing. Never stop improving. Never stop doing something new
How do I get directions buy or sell?
I would generally take directions from macd 12, 26, 9 or adx . Thanks and Regards
I was wondering if the bb bandwidth works on higher tf. Regards
Quoting 9money
How do I get directions buy or sell?
What r u doing here?
Do you have view his video?!
The indi does not give you any signal (B or S). It just show you an early warning of a breakout.
Quoting zoheb01
Hey team, I recently re-read John Bollinger's book - Bollinger on Bollinger Bands and I really liked the idea of the Bandwidth indicator. The bandwidth indicator looks at the difference in pips between the upper and lower BB and the lower the difference signifies a period of low volatility (also known as the BB squeeze). John Bollinger suggested that periods of low volatility is followed by a period of high volatility (breakout). There are a number of Bandwidth indicators on this forum and I've modfied one to provide an alert (on chart and push)...
Great job, tnx for the indicator.
I started a few threads in the past about Bollinger band strategy. So I like it a lot.
I am testing it now. I am trading it demo in the following way:

Gbpjpy: 15 min.

For long position: Wait for bands to go down to 10 pip range. Than wait for it to go above 30 pip. and price to break and close above top BB. Enter on next candle open. Sl below latest low. TP 3:1: Bring to breakeven when price reach 1:1.

To trade this more easily I need an add on to the indicator. Alert when the bands range goes to 30 pip(or adjustable value).

p.s. this could be turned into an EA to test different values of minrange and maxrange for individual pairs.
so far Gbpjpy looks good with 15min tf. minrange 10pips and maxrange 30 pips for entry.

tnx
Here is an example.
Attached Image (click to enlarge)
Click to Enlarge Name: OANDA - MetaTrader.png Size: 118 KB
Nice indi, Zoheb01. You're right, squeezes have been around a long time. TDI has had it since at least 2008, but I like your distance measure indi.

In my journal thread on post 74 on July 7, I mentioned the 4 hour gj chart was starting to squeeze down. When I mention something it means I need to pay attention to it...it's a warning of things to come. It meant something today!

What does a sentiment squeeze mean to a trader? Well, it means if it's squeezing while at the top of a sentiment indicator you're typically going to do a quick up to a big$ larger time frame target and then it's going to collapse (and vice versa if at the bottom of the sentiment indicator). (Squeezing in the middle is more difficult to judge, but I tend to be ready to go the opposite way of the initial move that ends the squeeze unless the squeeze is a lot of $ reversing a pair like happened June 26, 29 and 30 on gj.)
Attached Image (click to enlarge)
Click to Enlarge Name: 7 10 20 gj 4 hour squeeze frame.JPG Size: 216 KB
hi @zoheb01, thank you for this, never thought BB could be this powerful when used with a signal indicator., along with other indicators, this has very high potential.
Quoting hibra68
{quote} Great job, tnx for the indicator. I started a few threads in the past about Bollinger band strategy. So I like it a lot. I am testing it now. I am trading it demo in the following way: Gbpjpy: 15 min. For long position: Wait for bands to go down to 10 pip range. Than wait for it to go above 30 pip. and price to break and close above top BB. Enter on next candle open. Sl below latest low. TP 3:1: Bring to breakeven when price reach 1:1. To trade this more easily I need an add on to the indicator. Alert when the bands range goes to 30 pip(or...
Hello good time
Please explain with a picture and an example
What minimum value would be recommended on 4 hour charts?
A fool learns from his mistakes. A wise man learns from the fools mistakes.
Quoting goodways100
I was wondering if the bb bandwidth works on higher tf. Regards
Yes it does, you just need to adjust the minimum pip value!
Never stop investing. Never stop improving. Never stop doing something new
Quoting hibra68
{quote} Great job, tnx for the indicator. I started a few threads in the past about Bollinger band strategy. So I like it a lot. I am testing it now. I am trading it demo in the following way: Gbpjpy: 15 min. For long position: Wait for bands to go down to 10 pip range. Than wait for it to go above 30 pip. and price to break and close above top BB. Enter on next candle open. Sl below latest low. TP 3:1: Bring to breakeven when price reach 1:1. To trade this more easily I need an add on to the indicator. Alert when the bands range goes to 30 pip(or...
Thanks for this, sounds like a sound approach.

Yes to an EA, I originally had this scoped for an EA but I got side tracked in other projects.
Never stop investing. Never stop improving. Never stop doing something new
Quoting CashBox
Nice indi, Zoheb01. You're right, squeezes have been around a long time. TDI has had it since at least 2008, but I like your distance measure indi. In my journal thread on post 74 on July 7, I mentioned the 4 hour gj chart was starting to squeeze down. When I mention something it means I need to pay attention to it...it's a warning of things to come. It meant something today! What does a sentiment squeeze mean to a trader? Well, it means if it's squeezing while at the top of a sentiment indicator you're typically going to do a quick up to a big$...
I've made a note to check out your thread. Combining this with the TDI could be great.
Never stop investing. Never stop improving. Never stop doing something new
Quoting matthew89
What minimum value would be recommended on 4 hour charts?
If you load the indicator on a 4 hour chart and scroll back at the line you will see will get a sense what the lows have been. Each pair will be different.
Never stop investing. Never stop improving. Never stop doing something new
Very useful indicator, Zoheb. Thank you. Blessings.
Retur
Quoting zoheb01
{quote} If you load the indicator on a 4 hour chart and scroll back at the line you will see will get a sense what the lows have been. Each pair will be different.
If you could automate this process of assessing the last xx number of bars to calculate and define the size a squeeze for that chart you would be onto a real winner.
hello. Looking at the Bandwidth indicator, I would like to know if there is any indicator with a Bollinger band that gives an alert when the bands separate, indicating an increase in the price movement.I have this one that changes color but it doesn't have sound alert. Greetings.
Attached File(s)
File Type: ex4 Bollinger Band Advanced Edition.ex4   139 KB | 382 downloads
Quoting CashBox
Nice indi, Zoheb01. You're right, squeezes have been around a long time. TDI has had it since at least 2008, but I like your distance measure indi. In my journal thread on post 74 on July 7, I mentioned the 4 hour gj chart was starting to squeeze down. When I mention something it means I need to pay attention to it...it's a warning of things to come. It meant something today! What does a sentiment squeeze mean to a trader? Well, it means if it's squeezing while at the top of a sentiment indicator you're typically going to do a quick up to a big$...

Please explain why you did go short since the candle close below the low of BB in the second instance.
Thank you
Attached File(s)
File Type: ex4 OGT Bollinger Bandwidth Indicator v1.0.ex4   18 KB | 268 downloads
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