Bollinger Bands Stop V0

The Bollinger Bands Stop V0 indicator is a trend-following tool designed to help traders identify potential trend reversals and entry zones by tracking price action relative to dynamic volatility bands.

Usage

The script is primarily used to identify the current trend direction and potential areas for trailing stops or new entries.

• Trend Identification: When the stop source price crosses above the previous upper Bollinger Band, a bullish trend is initiated. Conversely, when the price crosses below the previous lower Bollinger Band, a bearish trend is initiated.
• Trailing Stops: The indicator plots a step-like line (S- or S+) that tracks the trend. In a bullish trend, the green line represents a rising floor, while in a bearish trend, the red line represents a falling ceiling.
• Entry Zones: By enabling "Show Entry Zone", the script highlights a specific area between the trailing stop and an adjusted risk level. This zone acts as a buffer where traders might look for pullbacks within an established trend.
• Points of Interest: When "Show Points" is enabled, the indicator marks specific price events:
  • Green Circles: Indicate the price is within a bullish entry zone.
  • Red Circles: Indicate the price is within a bearish entry zone.
  • White/Foreground Circles: Mark the exit of overbought or oversold conditions relative to the standard Bollinger Bands.

Details

The Bollinger Bands Stop V0 calculates standard Bollinger Bands (Basis, Upper, and Lower) using a Simple Moving Average and Standard Deviation. The logic then tracks "extreme" values of these bands to create the trailing stop lines.

The "Adjusted" levels (used for the Entry Zones) are calculated by applying a riskMultiplier to the current standard deviation and adding or subtracting it from the base stop level. This creates a wider area of interest that accounts for current market volatility. The trend state is maintained using a persistent variable that only flips when the price makes a significant breakout beyond the opposing band.

Settings

Main Settings

• Bollinger Band Source: The price source used to calculate the core Bollinger Bands.
• Stop Source: The price source used to trigger trend flips and entry zone signals.
• Length: The lookback period for the SMA and Standard Deviation.
• Band Deviation Multiplier: The number of standard deviations for the Bollinger Bands width.
• Risk Multiplier: Determines the width of the Entry Zone relative to the current volatility.

Visual Settings

• Show Bollinger Bands?: Toggles the visibility of the underlying Bollinger Bands and their background fill.
• Show Entry Zone?: Toggles the visibility of the shaded risk/entry zones.
• Show Points?: Toggles the display of circular markers for entries and overbought/oversold exits.

FAQ

How do I use the entry zones?

The entry zones are designed to highlight pullbacks within a trend. If the price enters the shaded green area during an uptrend, it may represent a "buy the dip" opportunity before the trend resumes.

What is the difference between the Stop Source and BB Source?

The BB Source determines the shape of the bands, while the Stop Source is what the script "watches" to determine if a trend has changed or if an entry zone has been hit. Usually, both are set to 'Close'.

How can I access Bollinger Bands Stop V0?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.