BBands Width Ratio Indicator for Meta Trader 4
The BBands Width Ratio Indicator for Meta Trader 4 is a very strange and uniquely built meta trader 4 indicators based on the Bollinger Bands with. That is, it automatically calculates the width of the Bollinger Bands to find out when there are compressions in the width as this can actually lead to huge movements in price action.
The Bollinger Bands have long been known to have price predictive properties embedded in it. This means that the Bollinger Bands can predict future prices by how compressed price action is at any particular time. This can then help the trader in how he analyses and expects trends.
Most of the use for the indicator revolves around the compression and expansion of price. this is a trading strategy that needs to be learned with patience and giving enough commitment before it can be mastered. The compression and expansion of price work by highlighting to the Trader exactly where price action seems to be held up within a tight range.
These tight range scenarios are very important because they present situations where institutional Traders are trying very hard for retail Traders not to know that they are busy accumulating trading positions in the market. some of these trend compression situations can be identified in pennants, flags patterns as well as descending wedges, ascending wedges, and all the other price contraction patterns.
Usually, what follows such patterns are huge moves and price action where price suddenly breaks out in one Direction and start moving today upside or downside with a lot of force. At this point, retail Traders are still trying to join in the trend whereas institutional Traders are already in profits as they accumulated their positions during the price compression.
One thing that would probably help the Trader understand this indicator would be to add Bollinger bands to the trading chart. adding this indicator to the chart would immediately show the Trader how price reacts every time this indicator slopes downwards towards the bottom of its window. remember that the way this indicator works is that the more its slopes downwards the tighter the compression between the two Bollinger Bands channels.
This can immediately show the Trader where prices heavily compressed as this is exactly where the institutional Traders are busy adding to their positions. Once a trader Sports displace the Trader can then immediately wait for a breakout. Most times than not the breakout is usually fake first since these additional Traders first make price breakout in the wrong direction. This is done intentionally so that the retail crowd can quickly jump on the trend of the breakout since a lot of people already probably know that I break out from a range is a big profit.
Other times the breakout is not fake. When the breakout is fake the market goes right back into the range and then breaks out in the other direction usually very quickly. retail Traders soon realize that they've been trapped on the wrong side of the market and start to close their positions which further adds to the momentum of the market as it speeds rapidly in the other direction.
The market then does this several times during the day trapping traders in different directions until the trading session is done. Then repeated the next day and the day after that day. understanding how to use this indicator would be a very wonderful opportunity for a trader as he or she would be able to have amazing insight into how these institutional Traders think and how they play with price action throughout the trading day. it will also enable Traders to understand how and why retail Traders are always losing their capitals in a very short time and what they can do to protect themselves from those types of losses and participate in the larger training moves.
when using this indicator, the Trader should observe that when the indicator creates high peaks, it simply implies that the Bollinger band is very wide at the time. this period is then followed shortly by a period where price then contracts before the bands expand again.
Benefits from using the BBands Width Ratio Indicator for MT4.
One of the major advantages of using this indicator would be the level and quality of insights it can give to a trader regarding price action. This is very essential in a technical trader's analysis of the markets as it determines how he sees the markets and what steps he should take next in the markets. This means that with time and constant use, a trader would then learn how each contraction and expansion of price on the smaller time frames are a part of a much larger contraction and expansion of price on much larger time frames and how all the time frames are interconnected. This understanding is very important if a trader really wants to become top notch at their trading game.
Another major advantage to using this indicator is that it helps the trader to streamline their trades and not be tempted into irrelevant trades where the markets have no directions in mind or are not ready to move. This then helps the trader to stay focused and instead of trading carelessly, learn to observe the twists and turns in the market as these inevitably lead to profits for the trader in the long run.
Lastly, it has a very low learning curve and is very easy to use once learned. This is largely because the indicator does not have a lot for conflicting signals or indicators with different colors for the trader to focus on. It just has one indicator that the trader needs to focus on. This helps to train a trader's attention and keep the trader more focused throughout the trading day as they scan their favorite currencies or trading assets for trading opportunities. The trader must, however, realize that trading is much more long term than it is shorter term and must use a very rigorous risk management routine to protect their balance from getting lost in the markets.