- May 31, 2013
- Posted by: Forex Wiki Team
- Category: FX Ind
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| Author: | paladin80 (2012.08.17 11:20) | ||
| Rating: | 8 | ||
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Description:The presented indicator is prepared on the basis of well known indicator Bollinger Bands. In short, Bollinger Bands consists of two lines that are situated above and below of moving average plotted of a certain number of standard deviations away from it. In case of high volatility lines become wider, during less volatile periods they become narrower. So, these bands show borders of possible price movement. Observation of the Bollinger’s behavior has revealed another interesting pattern. The widening of the channel indicates the formation of bullish or bearish type of the price movement. In my opinion it is not possible to find the starting point of such movement, because as a rule it becomes clear at the end. However, this moment may be adopted to find the point of extinction of the impulse. Figure 1 shows that the narrowing of the Bollinger Bands channel is correlated with the moment of the break in struggle between bears and bulls. For trader’s convenience, it is prepared indicator, which calculates difference between upper and lower lines of Bollinger Bands, which is plotted in a separate window as a histogram. Because of the lack the description in the literature the indicator with a similar algorithm, for the purpose of this publication I decided to call it BoDi (Bollinger's Difference) (Fig. 1).
Fig. 1. Indicator Bollinger Bands (on the chart) and BoDi (under chart) Indicator is calculated on the following formulas:
where:
2. BoDi: BoDi = (UpperBB - LowerBB) * 1000 where:
This indicator better to use on currencies with impulse behavior. Figure 1 shows that when price moves rapidly bands of Bollinger become wider and histogram of BoDi becomes green. In turn, when price movement slows the difference between Bollinger bands become narrower that is visible on BoDi’s histogram, which is colored to red. This moment can be treated as a signal to close position or partial close or to move stop-loss to the open price level. Indicator BoDi I can recommend as an additional tool to find exit points in trend and breakout type of trading (Fig. 2).
Figure 2. Examples of finding exit points. For those who uses expert advisers I may propose the following algorithm for finding point to close position: 1. BoDi [1] < BoDi [2], 2. BoDi [2] > BoDi [3], ... BoDi [n-1] > BoDi [n], (n = 7 - 9), 3. BoDi [2] > BoDi [n] * k, (k = 1.5 - 2) where:
I recommend to calculate BoDi on the basis of exponential moving average (EMA), period 20 and typical price. |
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TraderFFM1978:
Hi Paladin, BoDi ist not a name for an Indicator to get famous. Maybe u should name it 
The Paladin System
But first just rethink what u calculate: UpperBand= MA+SD(StandardDeviation) LowerBand= MA- SD
BoDi= UpperBand-LowerBand = ((MA + SD)-(MA-SD))*1000= (Ma+SD-Ma+SD)*1000= (MA-MA+SD+SD)*1000=2*SD*1000 So u just calculate the StandardDeviation*2*1000 This is not new.Sorry. You know I could agree with you. Before to publish it I felt that it will not be extraordinary indicator. I just wanted to show another way trying to find moment to close position. I was not familiarize well with Standart deviation indicator, but now I see that I just did the same as StdDev calculates. What is new is a visualization as histogram and tips for finding closing moment. Such interpretation may be applied to StdDev indicator. 05.11.2012 13:50 paladin80
Hi Paladin,
BoDi ist not a name for an Indicator to get famous. Maybe u should name it The Paladin System
But first just rethink what u calculate: UpperBand= MA+SD(StandardDeviation) LowerBand= MA- SD
BoDi= UpperBand-LowerBand = ((MA + SD)-(MA-SD))*1000= (Ma+SD-Ma+SD)*1000= (MA-MA+SD+SD)*1000=2*SD*1000 So u just calculate the StandardDeviation*2*1000 This is not new.Sorry. 31.10.2012 21:41 TraderFFM1978
For those who wants to use algorithm of this indicator in expert adviser, below the appropriate custom function. //--------------------------------------------- iBoDifunc() - start
//+----------------------------------------------------------------------------+
//| Input parameters: |
//| Sy - Symbol. |
//| Tf - Timeframe. |
//| BoDi_per - Averaging period. |
//| BoDi_shift - The indicator shift relative to the chart. |
//| Applied_price - Applied price. |
//| BoDi_MA_mode - Applied MA method. |
//| Shift - Index of the value taken from the indicator buffer. |
//+----------------------------------------------------------------------------+
//| Formula to calculate BoDi: |
//} BoDi = (UpperLine - LowerLine)*1000 |
//| where: UpperLine - upper line of Bollinger Bands |
//| LowerLine - lower line of Bollinger Bands |
//| 1000 - coefficient for better visualization |
//+----------------------------------------------------------------------------+
double iBoDifunc(string Sy,int Tf,int BoDi_per,int BoDi_shift,int Applied_price,int BoDi_MA_mode,int Shift)
{
double ML, sum=0.0, a;
if (Sy=="" || Sy=="0") Sy=Symbol();
ML=iMA(Sy,Tf,BoDi_per,BoDi_shift,BoDi_MA_mode,Applied_price,Shift);
for (int i=Shift; i<=BoDi_per-1+Shift; i++)
{ switch(Applied_price)
{ case PRICE_CLOSE: a=iClose(Sy,Tf,i+BoDi_shift)-ML; break;
case PRICE_OPEN: a=iOpen (Sy,Tf,i+BoDi_shift)-ML; break;
case PRICE_HIGH: a=iHigh (Sy,Tf,i+BoDi_shift)-ML; break;
case PRICE_LOW: a=iLow (Sy,Tf,i+BoDi_shift)-ML; break;
case PRICE_MEDIAN: a=(iHigh(Sy,Tf,i+BoDi_shift)+iLow(Sy,Tf,i+BoDi_shift))/2.0-ML; break;
case PRICE_TYPICAL: a=(iHigh(Sy,Tf,i+BoDi_shift)+iLow(Sy,Tf,i+BoDi_shift)+iClose(Sy,Tf,i+BoDi_shift))/3.0-ML; break;
case PRICE_WEIGHTED: a=(iHigh(Sy,Tf,i+BoDi_shift)+iLow(Sy,Tf,i+BoDi_shift)+2*iClose(Sy,Tf,i+BoDi_shift))/4.0-ML; break;
default: a=0.0;
}
sum+=a*a;
}
double semi_res=MathSqrt(sum/BoDi_per);
double upper=ML+semi_res;
double lower=ML-semi_res;
double diff=(upper-lower)*1000;
return (diff);
}
//--------------------------------------------- iBoDifunc() - end
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