Among the market analysis tools, there are those that are an improved version, that is, a modification of long-known indicators. These include BBands Stop, which I want to tell you about today. Already by its name, you can guess that this tool is based on the Bollinger bands popular among traders. The only difference is that if Bollinger Bands have three lines, then BBands Stop has only one. Signals are generated depending on the location of the price relative to this line. This indicator is easier to work with than the classic BB. And this is especially important for novice traders.
BBands Stop parameters
Since the accuracy of signals will depend on the indicator settings, you need to know about its parameters.
The period of the indicator curve is set using the Lenght parameter.
The Deviation parameter is needed to set the distance between the indicator line and the price level.
Money-Risk – This variable allows you to specify the acceptable level of risk.
In order to display pointers (arrows) to the optimal market entry point on the chart, you need to activate the Signal parameter.
Line – displays the indicator line.
N-Bars is a parameter that determines the number of candles to be used in calculations.
If you want the indicator to notify you about signals, then you need to activate Sound-On.
As you can see, there are not so many parameters in the settings. But there is something to work with.
How to trade with the BBands Stop indicator
To open trading positions, you need to do the following.
If a yellow arrow appears on the chart, it means that the indicator recommends selling. At the opening of the next candle, you can open a sell trade. At the same time, we place the stop-loss behind the yellow line. If after some time a green arrow appears on the chart, then it is better to close the open sell position.
If a green arrow appears on the chart, then we can consider opening a buy transaction. We do this at the opening of the next candle. Stop-loss is placed behind the green line. When an arrow of a different color appears on the chart, fix the profit.
There are no special features for installing the indicator in MT4. We do this in the usual way. Trading instruments and timeframes are at your discretion. I would recommend adding a filter for BBands Stop signals . With its help, you can improve your trading results. But first, you need to test the strategy on a demo account.