The Sigma Bands MT4 indicator is a modified version of the widely used Bollinger Bands indicator that offers an extended set of parameters for advanced trading strategies. This innovative indicator allows traders to customize the moving average (MA) and the number of bars for analysis, resulting in a more versatile and effective channel trading experience. In this article, we will discuss the key features of the Sigma Bands indicator, its advantages over the standard Bollinger Bands, and how it can be effectively employed in forex trading strategies.
Key Features of the Sigma Bands MT4 Indicator
The Sigma Bands indicator provides two distinct channels, offering traders greater insight into market trends and potential trading opportunities:
- The first channel represents where the price is 68% of the time for the selected number of bars. This channel is particularly useful for identifying short-term trends and potential trade entry points.
- The second channel shows where the price is 95% of the time for the selected number of bars. This channel is beneficial for understanding longer-term market trends and identifying potential reversal points.
Customization and Flexibility
One of the significant advantages of the Sigma Bands indicator over the standard Bollinger Bands is its ability to customize the moving average and the number of bars for analysis. With the default parameters, the constructed Sigma Bands channel will almost exactly replicate the Bollinger Bands with the same period equal to BarsCount. However, the Sigma Bands indicator allows traders to build Bollinger Bands not only with any period by changing the BarsCount but also to build it to the MA of their choice, with any period.
MA types that are supported:
- Simple MA
- Exponential MA
- Smoothed MA
- Linear-weighted MA
Prices at which you can build a channel:
- Close price
- Open price
- The maximum price for the period (High)
- The minimum price for the period (Low)
- Median price (high + low) / 2,
- Typical price (high + low + close) / 3
- Weighted close price (high + low + close + close) / 4
This level of customization is not available with the standard Bollinger Bands indicator, enabling traders to expand its scope and improve the effectiveness of channel trading strategies.
Using the Sigma Bands MT4 Indicator in Forex Trading Strategies
The Sigma Bands indicator can be effectively employed in a variety of forex trading strategies. Here are a few ways to incorporate this versatile tool into your trading approach:
- Trend Following: Use the Sigma Bands indicator to identify and follow market trends. When the price moves within the 68% channel, it indicates a short-term trend, while movement within the 95% channel signifies a more robust, longer-term trend. Traders can open positions in the direction of the trend, taking advantage of the momentum in the market.
- Reversal Trading: Monitor the Sigma Bands indicator for potential reversal points. When the price approaches the edges of the 95% channel, it may indicate an overbought or oversold market condition. Traders can look for potential reversal signals and enter counter-trend positions with proper risk management.
- Breakout Trading: The Sigma Bands indicator can also be used to identify breakout opportunities. When the price moves outside of the 68% channel, it may signal a potential breakout from a consolidation phase. Traders can enter positions in the direction of the breakout, anticipating a continuation of the trend.
The Sigma Bands MT4 indicator is a powerful and versatile tool that allows traders to enhance their channel trading strategies through advanced parameters and customization options. By providing insights into both short-term and long-term market trends, this indicator can help traders identify potential trading opportunities and make more informed decisions in the forex market. The flexibility and adaptability of the Sigma Bands indicator make it a valuable addition to any trader’s toolkit.
Features of Sigma Bands MT4 indicator
- Platform: Metatrader 4
- Ability to change settings: Yes
- Timeframe: any from 1 Minute to Daily
- Currency pairs: any
In sigma_bands.zip file you will find:
Download Sigma Bands MT4 indicator for free: