This indicator was created to see the total dollar (or whatever currency pair) amount spread between the upper and lower Bollinger Bands. This knowledge of knowing this spread can be used to indicate upcoming periods of high volatility in a market. The fundamental idea behind predicting periods of high volatility is backed up by the idea that periods of low volatility are followed by periods of high volatility and vice versa.
Based on this knowledge, the numerical spread of the Bollinger Bands, as shown in the indicator, we can deduce that when the value is super low, we can expect a period of high volatility AKA: big move incoming.
This indicator is not fully finished because this was my first time coding in Pinescript and I wanted to post the basic indicator first. My future plans for improving this indicator include:
Adding customization as an option to choose your personal BBands settings that this indicator is based off of
Potentially converting this indicator as a TradingView Strategy where a signal would go off when the spread reaches a certain threshold
ملاحظات الأخبار
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Added code for custom Bollinger Bands input for flexibility for everyone's different uses of Bollinger Bands
ملاحظات الأخبار
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Changed the way the data is presented by indexing the spread of the Bollinger Bands relative to the price of the asset. Basically just used the Bollinger Bands Width function that already exists and multiplied by 100 to get more precision.
My eventual goal is to figure out a threshold that when reached, creates a general signal of upcoming high volatility. That signal can then be used in conjunction with other indicators (to detect the direction of a trend) to create a buy or sell signal.
Hi. Thanks for sharing. I currently use a Bollinger Band Width indicator and compared it to yours. They pretty much give the same results.
I found your indicator while looking for a strategy script that would give a signal when bollinger band width is at it's 6 month's low (A strategy described in the book bollinger on bollinger. Do you know if such a strategy script exist?
jamiedubauskas
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@Madcaptains, Yea. This script was my first script and I made it when I didn't know that Bollinger Bands Width function already existed. So mine is the same except it doesn't give absurdly low numbers (like 0.012043...) instead it just multiplies that number by 100 to make the script easier to read. In regards to your question, I don't know if such a strategy exists. But I don't think it would be hard to create one using PineScript if you have previous programming knowledge.
Madcaptains
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@jamiedubauskas, thanks for your reply. I found an indicator that does pretty much what I described earlier. Its called BBW-Squeeze alerts and was made by Dashtrader.
@jamiedubauskas, oh wow... ok ok.. now I feel bad for finding one after I wrote to you :). Anyway I'm going to give it a good try tomorrow. I appreciate that you took that challenge and thank you very much for this. You rock
jamiedubauskas
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@Madcaptains, No problem. Don't feel bad if you like the other one better. It only took me 15 minutes to create. :)
If you like the script, follow me on Twitter: @jamiedubauskas. I post a lot of Bitcoin and SPX charts there.
I found your indicator while looking for a strategy script that would give a signal when bollinger band width is at it's 6 month's low (A strategy described in the book bollinger on bollinger. Do you know if such a strategy script exist?