What percentage should I use?

Depends on volatility. Forex might use 0.1-0.5%, stocks 1-3%. Backtest to find optimal.

Key Takeaways

Difficulty:Beginner

Reliability:Moderate

Category:volatility

Timeframes:1H, 4H, Daily

Moving Average Envelopes

volatility📊 1H, 4H, Daily

Percentage-based bands above and below a moving average.

Formula

Code

Upper = MA × (1 + Percentage)

Lower = MA × (1 - Percentage)

Detailed Explanation

Envelopes create bands at fixed percentages above and below a moving average.

Comparison to Bollinger:
- Envelopes: Fixed percentage width
- Bollinger: Dynamic width based on volatility
- Envelopes better for consistent markets

Trading Setup Example

Entry, stop loss, and take profit levels.

📈 Buy Setup

📉 Sell Setup

Always wait for signal confirmation before entering a trade.

Where This Indicator Works Best

Trend context and market position.

📈 Bullish Context

📉 Bearish Context

Measures market volatility and identifies breakout opportunities.

Live Chart — Moving Average Envelopes

See Moving Average Envelopes in action on a live chart. Try changing the settings and timeframe.

Charts powered by TradingViewGet TradingView Pro →

Parameters

MA Period

Default: 20

Moving average period

Percentage

Default: 2.5

Envelope width %

📈 Bullish Signals

Price bounces off lower envelope in uptrend

📉 Bearish Signals

Price rejected at upper envelope in downtrend

Python Implementation

Envelope calculation

Python

import pandas_ta as ta

pct = 0.025 # 2.5%

df['MA'] = ta.sma(df['close'], 20)

df['Upper'] = df['MA'] * (1 + pct)

df['Lower'] = df['MA'] * (1 - pct)

TradingView Pine Script

Try on TradingView

JavaScript

//@version=5

indicator("Envelopes", overlay=true)

basis = ta.sma(close, 20)

pct = 2.5 / 100

upper = basis * (1 + pct)

lower = basis * (1 - pct)

plot(upper, "Upper", color=color.red)

plot(basis, "Basis", color=color.gray)

plot(lower, "Lower", color=color.green)

📊 Use TradingView for Advanced Charting

Professional analysis tools with 100+ technical indicators

Get TradingView Pro

MT5 MQL5 Code

C++

int env_handle = iEnvelopes(_Symbol, _Period, 20, 0, MODE_SMA, PRICE_CLOSE, 2.5);

Python Libraries

pandas-ta

Technical analysis

pip install pandas-ta

Common Mistakes

✗Using same percentage for all markets

✗Not adjusting for volatility changes

Confirmation Signals

RSI

Volume

Candlestick patterns

Best For

Overbought/oversoldMean reversionTrend channels

💡 Pro Tips

•Fixed percentage unlike Bollinger Bands
•Good for stable trending markets
•Adjust percentage per volatility

Last updated: February 8, 2026

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

Learn More

Investopedia - Technical Indicators— Financial Education BabyPips - Technical Indicators— Trading School MetaTrader 5 Docs— Official Documentation

Frequently Asked Questions

Related Indicators

Bollinger Bands

Consists of a middle band (SMA) and upper/lower bands set at standard deviations from the middle.

Keltner Channels

Volatility-based envelopes using EMA and ATR, similar to Bollinger Bands but smoother.

ATR Bands

Price bands based on ATR around a moving average, adapting to volatility.

Back to All Indicators