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The LRMA BB indicator is an algorithm based on the operation of the standard Bollinger Bands forex indicator, with the addition of a modified version of the moving average. Thanks to this combination of indicators, the LRMA BB is very sensitive to market price changes and quickly responds to changes in the current market movement, therefore trades, opening with the help of the indicator, are as accurate as possible, and thus effective. The LRMA BB indicator is displayed directly on the price chart, and its visualization is somewhat reminiscent of Bollinger Bands, since there are three lines on the chart trade is made.
LRMA BB is suitable for use with any currency pairs on any timeframe.
Input parameters
The settings of the LRMA BB indicator contain three input parameters that are responsible for its technical operation and affect trading in general. The Colors section in the settings is responsible for the color scheme and thickness of the indicator lines.
- LRMA Period - the period of the linear regressive moving average used in the basis of the indicator. The default value is 30.
- BandsEnabled - parameter responsible for the presence of the upper and lower lines of Bollinger Bands on the chart. The default value is true.
- BandsDev - deviation of the current values of the Bollinger Bands indicator from the standard ones. The default value is 1.0.
Indicator signals
The LRMA BB indicator is similar to the standard version of Bollinger Bands not only in its visualization, but also in its tactics of use. That is, the indicator works on the same principle, only instead of the middle line of Bollinger Bands, the LRMA moving average is used, this makes the indicator calculations more accurate. Once the price is above the moving average and reaches the upper border of the channel, long positions are opened, and if the conditions are opposite, short ones. At the same time, the direction of movement of the moving average and other lines of the indicator should also be taken into account.
Signal for Buy trades:
- All indicator lines are moving up. The signal candle should be located above the moving average and reach the upper border of the channel.
Upon receipt of such conditions, a buy trade can be opened on a signal candle. It should be closed after the direction of the channel changes and all current prices fall below the moving average. At this moment, it should be considered opening positions in the opposite direction.
Signal for Sell trades:
- The channel formed by the indicator lines moves from top to bottom. At the same time, all current prices are below the moving average and reach the bottom line of the Bollinger Bands.
After receiving such conditions on the candle, which is a signal, a short position is opened. It should be closed immediately after the indicator lines start moving in the other direction, as this will signal the possibility of opening positions in the opposite direction to the current one.
Conclusion
The LRMA BB indicator is a very efficient and smart trading algorithm that is based on the functioning of standard indicators, the accuracy of which has been proven by time. At the same time, the indicator itself is extremely easy to use and will suit traders with different levels of trading skills. However, in order to fully master use of the indicator, preliminary practice on a demo account is recommended.
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