Index Bodie. -MetaTrader 4 Script | Forex Indicator Download - MT4/MT5 Resources - MetaTrader 5 Resources

The presented indicator is prepared based on the well-known indicator Bollinger Bands. Simply put, Bollinger Bands consist of two lines above and below a moving average that are a certain number of standard deviations away from the moving average. During periods of high volatility, the lines will become wider, and during periods of less volatility, the lines will become narrower. Therefore, these bands show the boundaries of possible price movements.

Observation of Bollinger Bands behavior reveals another interesting pattern. The widening of the channel indicates the formation of a bullish or bearish type of price action. It seems to me that it is impossible to find the starting point of this movement, because usually it becomes clear towards the end. However, this moment can be used to find the killing point of the impulse. Figure 1 shows that the narrowing of the Bollinger Bands channel correlates with breakout moments in the battle between bears and bulls.

For the convenience of traders, it prepares indicators that calculate the difference between the upper and lower Bollinger Bands and plots it in a separate window as a histogram. Due to the lack of descriptions of indicators with similar algorithms in the literature, for the purposes of this publication I decided to call it BoDi (Bollinger Difference) (Figure 1).

Figure 1. Bollinger Bands indicator (top chart) and BoDi (bottom chart)

The indicator is calculated according to the following formula:
1. Bollinger Bands:

BoDi = (upper BB - lower BB) * 1000

This indicator is more suitable for currencies with impulsive behavior. Figure 1 shows that when prices move rapidly, the Bollinger Bands widen and the BoDi histogram turns green. In turn, when price action slows down, the differences between Bollinger Bands become narrower, which is visible on BoDi’s histogram in red. This moment can be considered as a signal to close a position or partially close it or move the stop loss to the opening price level.

I can recommend the BoDi indicator as an additional tool to find exit points in trend and breakout type trades (Figure 2).

Figure 2. Example of finding exit points.

For those using expert advisors, I might propose the following algorithm to find closing points:

1. bodie[1] < bodie[2],

2. BoDi [2] > BoDi [3], ... BoDi [n-1] > BoDi [n], (n = 7 - 9),

3. BoDi [2] > BoDi [n] * k, (k = 1.5 - 2)

I recommend calculating BoDi based on the exponential moving average (EMA), period 20, and typical prices.

Attachment download

📎 BoDi.mq4 (6 KB)

Source: MQL5 #10820