Bollinger Band Width Indicator Guide

Bollinger band width (BBW) indicator in MT4 was created by John Bollinger, who introduced it in his book “Bollinger on Bollinger Bands”. In fact, the Bollinger band width mt5 indicator measures the percentage difference between the upper and downer Bollinger bands in crypto, currency, and forex markets. And it is one of the two parameters derived from the Bollinger band (the other is %B). Among them, we have the Bollinger band width indicator in Tradingview also, that’s we will discuss in this course.

What is Bollinger Band Width indicator ?

Bollinger band width Indicator shows the evolution of price volatility. Therefore it works as follows: when the volatility increases, the distance between the upper band and lower band will expand and the band width value rises. Conversely, when the volatility decreases, the distance between these two bands will contract then the band width.

In addition, when the two bands (the upper and the lower) are far apart, this is an indication that the current direction is nearing an end, but when the distance between them is narrow that is an indication that there is an initiation of a movement in either direction.

The Bollinger band width indicator contains a middle band with two outer bands. However, these bands in mt5 use the same parameters as the Bollinger band which are:

Simple moving-average period: for the middle band, usually set at 20 periods.
Standard deviation: for the outer bands, usually set 2 standard deviations above or below the SMA.

Why using the bollinger bandwidth indicator ?

The BBW MT5 indicator is the width between the upper band and lower band of the Bollinger band divided by the middle band.

It is used to warn CFD traders about the possible changes in volatility. Therefore it helps technical analysts to visualize the price consolidation or high volatility periods.

Indicator computation

The computation of the bandwidth indicator is as follow:

Band Width = [ (Upper Bollinger Band – Lower Bollinger Band) / Middle Bollinger Band ]

How to trade with BBW indicator ?

Bollinger band width Tradingview indicator is an oscillator that depends on the volatility. However, the volatility doesn’t give any trading signals because it is not a trend.

So, CFD traders in Tradingview notice the change in volatility once they use the Bollinger bandwidth indicator. This volatility can tell you the level of your reward according to the risk taken. High volatility means that you took a high risk so you have a high reward. And vice versa.

How to use Bollinger Band width ?

Forex CFDs Traders can trade with Bollinger band width in different ways. Therefore we can define the two most useful which are breakout and reversal movements.

In fact, after periods of consolidation (low volatility), prices tend to jump or fall in a volatile fashion. It is important to note that when the indicator rises to high levels, it regularly signals a reversal of the current direction.

Bollinger band width squeeze

BBW MT4 indicator is generally known for identifying the squeeze, there are two types of squeeze which are:

The bearish BBW squeeze: the volatility reached a very low level as evidenced by the narrowing bands.
The bullish BBW squeeze: the period of low volatility followed by a surge in volatility and price breaks through the upper band or falls through the lower band, consequently, this will lead to a change in the sideways movements and the start of a new move.

In addition, The Bollinger band squeeze in tradingview highlights a decline in the BBW indicator to below 2%. Moreover, the fall below 2% on the S&P 500 leads to several spectacular moves.

But you should know that the forex market often starts with a fake move, in the false direction, before the beginning of the real move in mt4.

What is the relationship between Bollinger band and Bollinger bandwidth ?

The Bollinger band refers to bands placed on a chart to present the volatility in the stock market and it consists of three lines drawn in relation to price. But, Bollinger bandwidth consists in fact of a single line drawn below the chart price of the bollinger bands in simple words, it calculates the difference between the upper and lower bollinger bands divided by the middle band.

Therefore BBW calculates the volatility in the stock market as we said earlier, according to the Bollinger bands.

Moreover, when you have a high BBW indicator, it will be presented in the price chart by an increase in the distance of the outer bands. But if you have a low BBW indicator it marks by a decrease in the distance between the upper and lower bollinger bands.

How to install the bollinger band Width indicator in Metatrader platform ?

Install the indicator

Download Bollinger band width indicator.
Copy the indicator to your record.
Open your platform.
Select the timeframe and the graph where you want to examine your indicator.
Find “custom indicators” often on the left
Join the indicator to your diagram by clicking on the right button on Bollinger bandwidth.
You can modify the Variables or simply accept the default variables and click ok.

Remove the indicator

Select the diagram where the indicator is running.
Click with the right button on the chart
Click on” indicators list”.
Select the indicator and then click into delate.

Download Bollinger band width indicator for MT4

Bollinger bandwidth indicator for MT4 is a technical indicator in Metatrader displayed below the main chart price. However, the graph below taken from the MetaTrader 4 platform shows a peak in the chart which means that the crypto market is very volatile and the BBW indicator rises, and vice versa.

Download Bollinger band width indicator for MT5

This MT5 Bollinger band width indicator is a technical indicator in Metatrader 5 that shows the volatility of the cryptocurrency in the coins market with the help of two bands. However, the picture below presents the difference between the two bands when the volatility is high and when it is low in MetaTrader 5. And you can also remark the change in the movement of the blue line which represents the change in BBW value.

Download Bollinger band width Indicator for Tradingview

Bollinger band width indicator Tradingview is known for volatility between bands. In other words, when you have a small band width value it indicates that there is low volatility in the forex market and you are in a period of consolidation. Indeed, the BBW indicator is available on the tradingview platform, therefore you don’t need to install it as you do on the MT4 and MT5 platforms. However, The two graphs below from the tradingview, show how the Bollinger band width moves in high and low volatility.

In fact, the chart below shows the three different bands of the Bollinger band width indicator in Tradingview. And we marked the distance between these bands to illustrate the volatility in the stock market.

The picture below shows that after a low band width (low volatility), the stock market will have a strong potential move. Therefore, this is known as the squeeze.

Conclusion

Bollinger band width indicator is popular which can be used in MT4. However, it helps traders to gauge the volatility in the crypto/forex market and to better understand their investments in MT5 also. Moreover, it is easy to use but it requires the use of other indicators to be useful. In conclusion, it is also known by identifying the squeeze in Tradingview also.

Key takeaways

Bollinger band width indicator in Metatrader calculates the distance between the upper band and downer band in percentage.
This MT5 indicator is based on the standard deviation, which is why it shows the evolution of price volatility in MT4. And it also identifies the squeeze.
The Bollinger band width rises when the volatility increases and falls when the volatility decreases.

May 15, 2023