i BandsPrice.mq4 Indicator For MT4
Table Of Contents:
- i BandsPrice.mq4 Indicator For MT4
- Trading ideas with the i BandsPrice.mq4 Indicator For MT4
- i BandsPrice.mq4 Indicator For MT4 - Mean Reversion
- i BandsPrice.mq4 Indicator For MT4 - Divergence
- i BandsPrice.mq4 Indicator For MT4 - Conclusion
The i BandsPrice.mq4 Indicator For MT4 displays the position of an asset price in relation to its Bollinger Bands. During range bound markets, mean reversion strategies can be employed using this indicator.
Trading ideas with the i BandsPrice.mq4 Indicator For MT4
The i-Bands indicator transforms the Bollinger bands data and price data of an asset into an oscillator which reflects the position of the market price. Below we have a visual of what the indicator looks like.
However looking at the image above you can see that the color is a bit too light for my liking so the best option is to maybe change the color to a more visible option. In the next image, you can see that I have changed the color to a more visible color like red. Furthermore, I also pointed out to you the extreme upper and lower limits of the indicator, and these numbers are represented by one and zero.
i BandsPrice.mq4 Indicator For MT4 - Mean Reversion
In the next image I have actually mentioned how you can use this tool.
After looking at the image above you can see that the basic strategy is basically to trade the oversold and overbought levels but this can be quite tricky at first therefore you must trade carefully. So as pointed out in the introductory phase of this article, this indicator can be used for trading mean reversion setups.
So with mean reversion what happens is is that the market diffuses from a middle point and therefore it has a tendency to return to the midpoint or equilibrium area If you wish. This may not always be the case but it always helps to sense and identify those extreme oversold and overbought regions in the market and then trade the mean reversions to a specific middle point.
The mean point will be the actual middle line of the Bollinger bands indicator. As you can see I am showing you a sell trading opportunity on the left-hand side followed by a buy position. You should sell when the market is above the upper line of the Bollinger bands indicator and also when the oscillator is equal to or greater than 1 and then our initial take profit target will be at the middle line of the Bollinger bands indicator.
Similarly, we have another trading opportunity which we identify in the form of a buy. We bought when the market was below the lower line or band ad when the oscillator was below zero. Our take profit was set at the middle line of the Bollinger bands indicator. This basic trading method simply sums up for us what we mean by mean reversion trading.
In the previous examples, we are trading based on a basic strategy that relies on us identifying prospective oversold and overbought areas and then executes trades in the opposite direction of the preceding price movement which formed prior to the oversold and overbought zones.
i BandsPrice.mq4 Indicator For MT4 - Divergence
However, this method of trading can induce multiple risk factors, thus faster affecting your ability to grow your trading account. Therefore it is paramount to add other elements into your trading dynamic so that you can become more profitable on a consistent basis.
One of the ways that you can look at adopting for maximizing the potency of the i-Bands Price indicator is to integrate regular divergence trading. With regular divergence trading, you are looking for reversal trading opportunities with the use of the i-Bands indicator as shown in the image below.
With this indicator you can easily identify regular divergence shapes. The first example is a bearish regular divergence pattern. I also circled an important price action pattern for us because it also informed the reversal for us to go short. There was a bearish pin bar in the circled area plus I also labeled the low of this pin bar candlestick because I wanted to get the timing of my entry right.
This is the point for us to initiate a short trade to the downside provided that there is enough bearish momentum to break this level. In the next example, there was a bullish trading opportunity that occurred in the form of a bullish regular divergence signal. The i-Bands indicator was making higher highs whilst the price action was making lower lows.
In this example, there was also a strong reversal pattern that came in the form of a pin bar. This pin bar formed right in an oversold region which gave us more compelling motivation to go long.
i BandsPrice.mq4 Indicator For MT4 - Conclusion
There are plenty of other ways that you can go about using the i-Bands indicator. The examples, I listed above were just based on mean reversion trading and also adding in other elements to increase our profitability so that we can have much more wins than we have losses. To achieve this I integrated regular divergence trading.
With regular divergence trading, we were able to pinpoint high-probability reversal trade setups in the mature phases of the market when the dominant trend is about to expire. This signifies that the market is most likely going to head in the opposite direction. Regular divergence trading is an absolute pleasure with the i-Bands indicator because it is easy to spot out therefore it appeals to a broader trading audience from almost all skill levels.
However, just make sure that you trade in a way that is sound relative to you exercising proper risk and money management. Because ultimately you are here to make money and stay longer in the game so do not get greedy.