Purpose of Bollinger Bands
Bollinger Bands are a volatility-based indicator that consists of three lines — a middle band (usually a moving average) and two outer bands placed above and below it. In the Trade Rule block, you can use Bollinger Bands to measure price volatility, identify potential overbought/oversold conditions, or trigger trades when price interacts with a specific band.
How It Works
When you select Bollinger Bands as a value type in the Trade Rule block, you can customize several parameters to fine-tune the indicator for your strategy:
Bands Period of Bollinger Bands
The number of candles used to calculate the middle line (moving average).
Example: A period of
20uses the last 20 candles in the calculation.
Bands Mode of Bollinger Bands (Which band to use)
Middle Line: The central moving average line.
Upper Line: Middle line + (Deviation × standard deviation of price).
Lower Line: Middle line – (Deviation × standard deviation of price).
Bands Shift of Bollinger Bands (Advanced Option)
Moves the entire indicator forward or backward on the chart by a set number of candles.
Mainly used for testing or offset strategies.
Deviation of Bollinger Bands
Controls the distance of the upper and lower bands from the middle band.
Higher deviation = wider bands (more volatility buffer).
Lower deviation = narrower bands (more sensitivity to price).
Applied Price of Bollinger Bands (What the bands are calculated from)
Close Price: Uses the candle’s closing price.
Open Price: Uses the candle’s opening price.
High Price: Uses the highest price in the candle.
Low Price: Uses the lowest price in the candle.
Median Price: (High + Low) ÷ 2
Typical Price: (High + Low + Close) ÷ 3
Weighted Price: (High + Low + Open + Close) ÷ 4
Time Frame of Bollinger Bands
Sets the chart time frame for the Bollinger Bands calculation.
Can be replaced with a variable or input for quick testing and optimization.
Candle ID of Bollinger Bands
Defines which candle the calculation starts from.
0: Current candle (still forming).
1: Most recently closed candle.
Higher IDs refer to older candles.
Adjust of Bollinger Bands (Modify the Result)
Apply an adjustment to the calculated value by adding, subtracting, multiplying, or dividing by a number.
Example
If you set:
Bands Period: 20
Bands Mode: Upper Line
Deviation: 2
Applied Price: Close
Candle ID: 1
The block will return the value of the upper band of a 20-period Bollinger Band, calculated from the closing price of the most recently closed candle.
Use Cases
Detect overbought conditions when price touches the upper band.
Detect oversold conditions when price touches the lower band.
Use the middle line as a dynamic support/resistance level.
Identify volatility squeezes when the bands narrow, potentially signaling an upcoming breakout.
⚠ Tip: Combining Bollinger Bands with other indicators (e.g., Moving Average, RSI) can help filter false signals and improve strategy accuracy.