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Bollinger bands is another popular and simple to understand trading indicator. Bollinger bands help define price relative trading channel and will alert trader in moments of price divergence or increased volatility. Learn how to use Bollinger bands indicator for binary options trading.

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Bollinger Bands Explained

Bollinger Bands Indicator is probably the most used indicator for binary options trading by beginners. The indicator provides the information on the relative high and low prices of the traded asset.

It also gives the information about the market volatility. When the bands are close together it implies that the market has the low volatility, and when the bands are wide it implies that the market is more volatile. Beginners strategy of using the bollinger bands is usually to trade reversals on price breakouts out of the bands zone. However, when trends occur the price has the tendency to 'climb' the bollinger band and if consecutive reversals are traded this type of trading can result in many bad trades.

How to Trade Binary Options with Bollinger Bands Indicator

To be able to efficiently trade binary options it is advised is to combine this indicator with Stochastic Oscillator which gives another type of information about overbought and oversold market conditions. To get the precise trade entry points Fibonacci Indicator or predefined Support and Resistance Levels can be used.