Bermaui Bands (BB) is a technical analysis tool that help filter between ranging and trending price movements. The idea behind this indicator can be explained in the next steps:
- Calculate Standard Deviation as oscillator that move between 0 and 100. I will name it Bermaui Deviation percent (BD %).
- If "BD %" is near zero then volatility is at its extreme. In addition, if "BD %" is near 100 then volatility is very low.
- High volatility mean a great probability for a trending market, while low volatility mean side-way or ranging market.
- Middle Line is a Simple Moving Average (SMA), because Standard Deviation is calculated depending on SMA.
- Add "BD %" to a simple moving average with the same number of bars in calculation to get The Upper Bermaui Band.
- Subtract "BD %" from a simple moving average with the same number of bars in calculation to get The Lower Bermaui Bands.
How to use it
- Use Bermaui Bands as a filter to help you identify trend direction.
- If BB lines separate from each other then there is a great probability that price candles will move in a side-way or a ranging movement.
- When BB lines separate from each other and price candles move in between them then trade with a ranging market strategy.
- If BB lines combine like a single line then there is a great probability that price will move in a trending movement.
- When BB lines combine like a single line and price candles move away from them then trade with a trending market strategy.
- Buy & Sell alert signals when price candles penetrate BB lines.
- Suggested Stop loss that depend on a percent from Standard Deviation.
- Well-designed style that user can control.
- Sound, email alerts depending on user choice.
Bermaui Bands most important inputs
- Candles - number of candles used in bands calculations (default is 50 candles).
- Deviation_Multiplier - this parameter will help you to control Bermaui Bands width or how much far the bands can be away from the center-line (default is 2.1).
- Band_Width - Choose the width of the bands (median line will always be a dotted line).
- Band_Color - Color of the bands.
- Show_Signal - Show or hide signal arrows (default is true).
- Risk_percent - Deviation percent that separate Buy & Sell arrows from close price when a signal is true (default is 25 %). Where you can use signal arrows as a stop loss levels.
- Up_Arrow_Color - Color for buy signal.
- Down_Arrow_Color - Color for sell signal.
- Alerts - Choose to use or stop alert sound and message (default is true).
- Text_BUY - Buy Alert message.
- Text_SELL - Sell Alert message.
- eMail_Send - Option to send notification to the user (default is false).
- Notification_Send - Option to send notification to the user (default is false).
I hope you find Bermaui Bands a good investment tool for you.
Label in Data Window is enhanced.
- Signal & alert now appear for the first time only until reverse.
- change in style and colors.