The Bollinger Bands (BB) indicator is a volatility-based tool that consists of a moving average (usually a simple moving average) and two standard deviation lines (upper and lower bands) plotted above and below it. Bollinger Bands help identify overbought or oversold conditions, as well as potential breakout points.
How it works:
The middle line is a moving average (MA) of the asset price.
The upper and lower bands are calculated as a specified number of standard deviations from the MA.
When price touches or moves outside the bands, it may indicate potential reversals or continuation patterns.
Using Bollinger Bands in Capitalise.ai:
You can incorporate BB into your strategy with the following parameters:
Number of Bars (NumOfBars): Number of bars used in the moving average calculation (max 200).
Bar Period (BarPeriod): Time interval per bar (1m, 5m, 15m, 30m, 1h, 2h, 4h, Day, Week, Month).
Bar Price (BarPrice): Price type for calculations (Open, Close, High, Low, Mid).
Standard Deviation (StdDev): Number of standard deviations to plot upper and lower bands (commonly 2).
Examples:
Buy 1,000 EUR/USD if EUR/USD closes above the upper Bollinger Band (20, 2, Day, Close)
Sell 50 shares of AAPL if AAPL closes below the lower Bollinger Band (50, 2, 1h, Close)