How To Apply Bollinger Bands® With Metatrader 4: Customizing Bollinger Bands®

Customizing Bollinger Bands®
Regardless of the method used to attach Bollinger Bands® to a price chart, the Bollinger Bands® window will appear. This window has three different tabs that allow traders to customize the appearance and performance of the indicator:

1. Parameters

2. Levels

3. Visualization


The "Parameters" tab, shown in Figure 5, allows traders to customize several inputs:

• Period - the length of the simple moving average (middle band). By default, this is set to 20.
• Shift - the offset of the indicator. By default, this is set to zero, representing no shift.
• Deviations - the number of standard deviations to be used in the upper and lower band calculations. By default, this is set to 2.
• Apply to - the price data that will be used in the calculations. By default, this is set to Close. Other choices include Open, High, Low, Typical Price and Weighted Close.
• Style - the color, line style and line weight of the indicator.

Figure 5: The Bollinger Bands® Parameters tab.

SEE: How Market Psychology Drives Technical Indicators

The "Levels" tab, shown in Figure 6, allows traders to change the colors of the upper and lower bands, or include additional bands to the indicator. To change the colors of the upper and lower bands:

• Click Add, double-click in the Level field, and enter "1". Enter a name for the level in the description field (such as "Upper").
• Click Add again to add a second level. This time enter "-1" (negative 1). Enter a name in the description field.
• Choose the Style - color, line style and line weight.
• Click "OK" to close the window.

The upper and lower bands will now appear in the new color.

Figure 6: Traders can change the colors of the upper and lower bands in the Levels tab.

SEE: Technical Analysis: Indicators and Oscillators

To add more bands to the indicators, enter the desired level(s) in the Level field, along with a name in the Description field. To create bands that are not based on integer values, such as bands based on the Fibonacci number 1.618:

• Set the Standard Deviations in the "Parameters" tab to 1 with no color (select "None" in the color drop-down menu).
• In the "Levels" tab, add Levels as 1.618 and -1.618 (or any other values; these values represent the Fibonacci-based bands) and select the desired Style settings.
• To add a middle line, add a Level at 0.
• Click "OK" to close the window.

The "Visualization" tab, shown in Figure 7, is used to specify to which timeframe(s) the Bollinger Bands® indicator will be anchored. This can be done so that the indicator's settings (such as color and Standard Deviations) will not have to be set with each new timeframe. Check "All Timeframes" to specify that the indicator and its settings will appear on any chart when toggling between different timeframes. Alternatively, select specific timeframes to limit Bollinger Bands® to those timeframes.

Figure 7: Traders can specify to which timeframes the Bollinger Bands® indicator will be attached by making selections in the "Visualization" tab.