Bollinger indicator is a trading indicator that is used in technical analysis. It’s widely used by millions of traders in many markets. It’s usually used to determine overbought and oversold levels, as a trend following tool, and for monitoring for breakouts.
Bollinger indicator is based on the Mean Reversion theory – a financial theory says that asset prices and historical returns eventually revert to their long-term mean or average level.
Based on the information provided by Bollinger indicator, traders can determine the time an asset is Overbought – Oversold and revert to enter a Buy – Sell trade.
A basic Bollinger indicator can be good enough for a professional traders with lot of experiences and time to monitor the market. They can determine Overbought – Oversold signals and monitor the market to see when the price is reverted and enter a trade. However, most of traders can’t do that. New traders with less experiences can’t determine the right signals, calculate points to Entry – Stop loss – Take profit for a trade effectively and quickly. Some experienced traders also don’t have enough time to monitor the market. And those are reasons we developed Bollinger+++ indicator with more advanced features.
Add Bollinger+++ into chart
- Open the chart and choose the timeframe you would like to trade
- Click. “Indicators” (In the top tool bar)
- Select “Invite-only scripts” category
- Select [SAFE] Bollinger+++ to add this indicator into chart
- Open Settings panel by clicking the gear icon to change indicator’s settings
- Source: Data source for calculation. “close” is the common option. However, you can use any data source you prefer.
- Length: The length parameter (Number of candles) will be used in the algorithm.
- Offset: Move the bands forward or backward. Use positive number to move them forward and negative number to move them backward.
- Medium Bands – StdDev: Check/Uncheck to turn on/off Medium bands. Use the number to set bands factor. Typical bands factor: 2
- Strong Bands – StdDev: Check/Uncheck to turn on/off Strong bands. Use the number to set bands factor. Typical bands factor: 3
- Extreme Bands – StdDev: Check/Uncheck to turn on/off Extreme bands. Use the number to set bands factor. Typical bands factor: 4
- Fill The Cloud: Check/Uncheck to fill the clouds between bands with colors or not.
- Show Buy/Sell Signals: Check/Uncheck to turn on/off Buy – Sell signals
- Show Trade Suggestion: Check/Uncheck to turn on/off trade suggestion based on Buy – Sell signal
- Risk Tolerance: Pick the risk tolerance for your trade suggestion: Low means Stop loss and Take profit in a low risk; Medium means SL & TP in a typical risk; High means SL as same as Medium but using 2 TP levels.
Note: These settings are suitable for experienced traders who would like to set up Trade Suggestion automatically (for groups or channels). This feature need to be used together with Alerts feature by TradingView. Less experienced traders should use Alert Conditions in below section.
- Buy Signals: Select to fire alert with detailed trade suggestion (Entry price, Stop loss price and Take profit price in the message) when having a Buy signal.
- Sell Signals: Select to fire alert with detailed trade suggestion (Entry price, Stop loss price and Take profit price in the message) when having a Sell signal.
Next to Fire Alerts settings, there is a box to choose alert frequency:
- Everytime: In the same candle, it may have more than 1 time the price matches Buy – Sell condition. This option will fire alert every time the Buy – Sell signal appears. So you may get more than 1 alert with the same message in 1 candle.
- Once Per Bar: Fire alert right away but just once per bar (The first time when Buy – Sell signal appears).
- When Bar Close: Fire alert when the bar closes and the Buy – Sell signal appears in this bar.
Use Bollinger+++ in trading
Bollinger/Bollinger+++ indicator is suitable for swing traders who use Overbought – Oversold signal as trade condition. In other words, if you are a trader who would like to Buy The Dip and Sell The Rip, this is the indicator for you.
In Bollinger+++ indicator, the Buy signal will appears when the is a clearly oversold signal and then the price starts to revert to the mean price (price goes up). This is the time you should consider to buy asset; The Sell signal will appear when there is a clearly overbought signal and the price starts to revert to the mean price (price goes down). This is the time you should consider to sell you asset or place a Short order (If you are in a future market). Buying when price starts to goes up and selling when price starts to goes down help to reduce risk as we try to buy the dip and sell the rip but still follow market trend.
- Buy signal is a green label with “Buy” text below the candle
- Sell signal is a red label with “Sell” text above the candle
These Buy – Sell label appears right on the candle where the Buy – Sell signal appears. Whenever there is a Buy or Sell signal, the indicator uses its algorithm to calculate Entry point, Stop loss point and Take profit point(s), then show these points with additional info on the chart:
- “Entry” label in blue with the number means suggested Entry price
- “SL” label in red with the number means suggested Stop loss price
- “TP” label in green with the number means suggested Take Profit price. Depend on the Risk Tolerance setting, you may see 1 or 2 stop loss points.
- The red area between the Entry price and Stop loss price means Losing area. It has numbers to show your lost in absolute number and percentage number.
- The green area between the Entry price and Take profit price means Winning area. It has numbers to show your earn in absolute number and percentage number.
If you absolutely trust this indicator, you can follow all trade signals to buy and sell with detailed trade suggestion. However, we suggest you using these Buy – Sell signals as the main trading condition and double check them with other market data before making your trade decision. It helps to let you trades more safely and effectively.
Bollinger+++ alert conditions
- Buy Signal: When there is a Buy signal
- Sell Signal: When there is a Sell signal
- Buy/Sell Signal: When there is a Buy or Sell signal
- Any alert() function call: This is an advanced alert condition that you need to combine with Alert Settings described above to fire alert with detailed trade suggestion in the message.