BBands Stops
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This script is a technical analysis tool designed for the MetaTrader platform to help traders identify price trends and determine optimal "stop-loss" levels based on volatility. It utilizes the Bollinger Bands—a common trading indicator that measures market movement—as its core logic, but it modifies them to provide more specific directional signals.
Here is a breakdown of how the logic works in plain language:
Trend Detection
The script constantly monitors the relationship between the current market price and the upper and lower boundaries of the Bollinger Bands.
- Bullish Momentum: If the price closes above the upper boundary, the script identifies an upward trend.
- Bearish Momentum: If the price closes below the lower boundary, it identifies a downward trend.
Dynamic Stop-Loss Calculation
Once a trend is established, the tool calculates specific support and resistance levels (acting as stop-loss boundaries). It does this using two main factors:
- Trend Persistence: The script "locks" these levels so they only move in your favor. For example, in an uptrend, it ensures the stop-loss line never moves upward; it can only move higher as the price climbs. This prevents a retracement from prematurely triggering a stop.
- Risk Offset: It includes a customizable "Money Risk" factor. This allows you to adjust how much "breathing room" is given to the price relative to the volatility of the market, effectively widening or tightening the distance between the trend line and the price action.
Visual Signals
The script provides three different ways to view this information on your chart:
- Trend Lines: It can draw continuous lines representing the current protective floor (in an uptrend) or ceiling (in a downtrend).
- Signals: It identifies the exact moment a trend shifts or is confirmed by placing visual markers (arrows) on the chart.
- Stop Levels: It focuses specifically on identifying the price point where a trend would be considered "broken," allowing traders to know exactly where to exit a position if the market turns against them.
Summary of Behavior
In short, this tool filters out market "noise" by waiting for price to break out of established volatility bands. Once it detects that direction, it tracks the movement and provides a dynamic, non-moving (in the wrong direction) safety line that adjusts automatically based on how much the market is fluctuating.
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BBands Stops
//+------------------------------------------------------------------+
//| BBands_Stop_v1.mq4 |
//| Copyright © 2006, TrendLaboratory Ltd. |
//| http://finance.groups.yahoo.com/group/TrendLaboratory |
//| E-mail: igorad2004@list.ru |
//+------------------------------------------------------------------+
#property copyright "Copyright © 2006, TrendLaboratory Ltd."
#property link "http://finance.groups.yahoo.com/group/TrendLaboratory"
#property indicator_chart_window
#property indicator_buffers 6
#property indicator_color1 Chartreuse
#property indicator_color2 Orange
#property indicator_color3 Chartreuse
#property indicator_color4 Orange
#property indicator_color5 Chartreuse
#property indicator_color6 Orange
//---- input parameters
extern int Length=13; // Bollinger Bands Period
extern int Deviation=2; // Deviation
extern double MoneyRisk=1.00; // Offset Factor
extern int Signal=1; // Display signals mode: 1-Signals & Stops; 0-only Stops; 2-only Signals;
extern int Line=1; // Display line mode: 0-no,1-yes
extern int Nbars=1000;
//---- indicator buffers
double UpTrendBuffer[];
double DownTrendBuffer[];
double UpTrendSignal[];
double DownTrendSignal[];
double UpTrendLine[];
double DownTrendLine[];
//+------------------------------------------------------------------+
//| Custom indicator initialization function |
//+------------------------------------------------------------------+
int init()
{
string short_name;
//---- indicator line
SetIndexBuffer(0,UpTrendBuffer);
SetIndexBuffer(1,DownTrendBuffer);
SetIndexBuffer(2,UpTrendSignal);
SetIndexBuffer(3,DownTrendSignal);
SetIndexBuffer(4,UpTrendLine);
SetIndexBuffer(5,DownTrendLine);
SetIndexStyle(0,DRAW_ARROW);
SetIndexStyle(1,DRAW_ARROW);
SetIndexStyle(2,DRAW_ARROW);
SetIndexStyle(3,DRAW_ARROW);
SetIndexStyle(4,DRAW_LINE);
SetIndexStyle(5,DRAW_LINE);
SetIndexArrow(0,159);
SetIndexArrow(1,159);
SetIndexArrow(2,108);
SetIndexArrow(3,108);
IndicatorDigits(MarketInfo(Symbol(),MODE_DIGITS));
//---- name for DataWindow and indicator subwindow label
short_name="BBands Stop("+Length+","+Deviation+")";
IndicatorShortName(short_name);
SetIndexLabel(0,"UpTrend Stop");
SetIndexLabel(1,"DownTrend Stop");
SetIndexLabel(2,"UpTrend Signal");
SetIndexLabel(3,"DownTrend Signal");
SetIndexLabel(4,"UpTrend Line");
SetIndexLabel(5,"DownTrend Line");
//----
SetIndexDrawBegin(0,Length);
SetIndexDrawBegin(1,Length);
SetIndexDrawBegin(2,Length);
SetIndexDrawBegin(3,Length);
SetIndexDrawBegin(4,Length);
SetIndexDrawBegin(5,Length);
//----
return(0);
}
//+------------------------------------------------------------------+
//| Bollinger Bands_Stop_v1 |
//+------------------------------------------------------------------+
int start()
{
int i,shift,trend;
double smax[25000],smin[25000],bsmax[25000],bsmin[25000];
for (shift=Nbars;shift>=0;shift--)
{
UpTrendBuffer[shift]=0;
DownTrendBuffer[shift]=0;
UpTrendSignal[shift]=0;
DownTrendSignal[shift]=0;
UpTrendLine[shift]=EMPTY_VALUE;
DownTrendLine[shift]=EMPTY_VALUE;
}
for (shift=Nbars-Length-1;shift>=0;shift--)
{
smax[shift]=iBands(NULL,0,Length,Deviation,0,PRICE_CLOSE,MODE_UPPER,shift);
smin[shift]=iBands(NULL,0,Length,Deviation,0,PRICE_CLOSE,MODE_LOWER,shift);
if (Close[shift]>smax[shift+1]) trend=1;
if (Close[shift]<smin[shift+1]) trend=-1;
if(trend>0 && smin[shift]<smin[shift+1]) smin[shift]=smin[shift+1];
if(trend<0 && smax[shift]>smax[shift+1]) smax[shift]=smax[shift+1];
bsmax[shift]=smax[shift]+0.5*(MoneyRisk-1)*(smax[shift]-smin[shift]);
bsmin[shift]=smin[shift]-0.5*(MoneyRisk-1)*(smax[shift]-smin[shift]);
if(trend>0 && bsmin[shift]<bsmin[shift+1]) bsmin[shift]=bsmin[shift+1];
if(trend<0 && bsmax[shift]>bsmax[shift+1]) bsmax[shift]=bsmax[shift+1];
if (trend>0)
{
if (Signal>0 && UpTrendBuffer[shift+1]==-1.0)
{
UpTrendSignal[shift]=bsmin[shift];
UpTrendBuffer[shift]=bsmin[shift];
if(Line>0) UpTrendLine[shift]=bsmin[shift];
}
else
{
UpTrendBuffer[shift]=bsmin[shift];
if(Line>0) UpTrendLine[shift]=bsmin[shift];
UpTrendSignal[shift]=-1;
}
if (Signal==2) UpTrendBuffer[shift]=0;
DownTrendSignal[shift]=-1;
DownTrendBuffer[shift]=-1.0;
DownTrendLine[shift]=EMPTY_VALUE;
}
if (trend<0)
{
if (Signal>0 && DownTrendBuffer[shift+1]==-1.0)
{
DownTrendSignal[shift]=bsmax[shift];
DownTrendBuffer[shift]=bsmax[shift];
if(Line>0) DownTrendLine[shift]=bsmax[shift];
}
else
{
DownTrendBuffer[shift]=bsmax[shift];
if(Line>0)DownTrendLine[shift]=bsmax[shift];
DownTrendSignal[shift]=-1;
}
if (Signal==2) DownTrendBuffer[shift]=0;
UpTrendSignal[shift]=-1;
UpTrendBuffer[shift]=-1.0;
UpTrendLine[shift]=EMPTY_VALUE;
}
}
return(0);
}
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