How to trade properly with Bollinger Band on Olymp Trade?

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(Last Updated On: 3rd January 2023)

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Bollinger band is one of the most important family members of trend indicators that Olymp Trade offers. You can easily find the market volatility and the current trend using this indicator.

What is Bollinger Band

 

Bollinger band is a trend indicator developed by John Bollinger. This indicator is made from the composition of three lines upper line, lower line & middle line. Where the middle line represents the SMA or Simple moving average whereas the upper and lower line represents the Standard deviation of SMA. The calculation of the Bollinger band can be done by a formula however, the good news is that you are here to trade so don’t need to apply any mathematics as the calculation work is already done by the Olymp Trade platform.

 

Bollinger Band Formula:

The formula for Bollinger Band is:

BOL U = MA (TP , n) + m * σ (TP, n)

BOL D = MA (TP, n ) – m * σ ( TP, n)

Where,

BOL U = Upper Bollinger Band

BOL D = Lower Bollinger Band

MA = Moving average

TP = Typical price = (High + Low + Close ) / 3

n = Number of days in smoothing period (typically 20).

m = Number of Standard deviation (Typically 2)

σ (TP,n) = SD over last n periods of TP.

 

How to configure Bollinger Band on Olymp Trade

 

Your first job is to log in to your Olymp Trade. In case you don’t have one click here.

You can also sign up via the form given below.

You can sign up here try…

 

Once you have signed up, you will land on the Olymp Trade dashboard. Makes sure to your set your default chart to the candlestick.

 

 

Now, click on the indicator button and select Bollinger band from the given menu.

 

 

The default settings are period 20 and standard deviation 2 you can easily change them by clicking on the pencil icon plus you can change the colour for better visibility.

 

How to trade with Bollinger Band on the Olymp Trade platform

The Bollinger band is made from three lines middle line, upper line, & lower line.

 

  • The middle line is called the SMA line which is the average of over 20 days.
  • The upper line is a value of SMA 20 plus twice the 20 – day standard price deviation.
  • The upper line is a value of SMA 20 minus twice the 20 – day standard price deviation.

Trading with Bollinger Band is very easy. You just need to remember the golden rule.

The golden rule of the Bollinger Band says:

If the candle is over the lower band of the Bollinger Band with the candle outside the Bollinger band. Then we should take a buy trade.

Similarly, If the candle is over the upper band of the Bollinger Band with the candle outside the Bollinger band. Then we should take a sell trade.

Let’s check a few examples.

 

Given above is a 1 hour chart and we can clearly see that the candle is over the lower line of the indicator with the candle outside the Bollinger band. Then we should place a buy trade.

 

Similarly, Given above is a 1-hour chart and we can clearly see that the candle is over the upper line of the Bollinger Band with the candle outside the Bollinger band. Then we should take a sell trade.

How reliable are Bollinger Band?

Bollinger is a reliable indicator. However, If you want to gain better results you should support and resistance to confirm your order.

While using support and resistance you should remember this golden rule:

If the candle is over the lower line of the Bollinger Band with the candle outside the Bollinger band plus the candle near the support level. Then we should take a buy trade.

Similarly, If the candle is over the upper line of the Bollinger Band with the candle outside the Bollinger band plus the candle near the resistance level. Then we should take a sell trade.

Let’s check a few examples:

 

 

Given above is a 1 hour chart and we can clearly see that the candle is over the upper line of the Bollinger Band with the candle outside the Bollinger band plus the candle near the resistance level. Then we should take a sell trade.

 

Similarly, Given above is a 1-hour chart and we can clearly see that the candle is over the lower line of Bollinger Band with the candle outside the Bollinger band plus the candle near the support level. Then we should take a buy trade.

So, This is how you trade with the I hope you have found this article helpful. The best you can do is try this indicator on the Olymp Trade demo account and once you are confident enough shift to Olymp Trade real account. Till then I wish you the very best of luck 🙂

 

 

 

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