The popular Bollinger Bands MT4 indicator was originally developed by John Bollinger and is used to measure volatility of any market instrument, including currency pairs.
The indicator consists of 3 bands, the middle band and two outer bands.
Bollinger bands shows us volatility in the market, when the bands are close together, volatility is low.
On the contrary, when the bands are wide, it simply means high volatility.
The EUR/USD H1 Min chart below shows the Bollinger Bands forex indicator in action.
Basic Trading Signals
Traders use Bollinger Bands in various ways, here’s an example:
Buy signal: In an up trending market, go long at the lower band (buy on dips- oversold).
Sell signal: In an down trending market, go short at the upper band (sell on rallies- overbought).
MT4 Indicator Characteristics
Currency pairs: Any
Platform: Metatrader 4
Type: chart pattern indicator
Customization options: Variable (Bands Period, Bands Shift, Bands Deviations) Colors, width & Style.
Time frames: 1-Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, 1-Day, 1-Week, 1-Month
Copy and paste the Bands.mq4 indicator into the MQL4 indicators folder of the Metatrader 4 trading platform.
You can access this folder from the top menu as follows:
File > Open Data Folder > MQL4 > Indicators (paste here)