Do Bollinger Bands Work?

There is a lot of question asking whether the Bollinger bands work at all for a trader. From my experience using it, the answer is YES and therefore in this article, I will be sharing with you how I use the bands to trade. Those traders who have problems with using the bands are usually trading using it alone. In fact, there is no way you can trade with a single indicator. You must always trade with several indicators and then place your trade when most of them are showing a confluence of signs.

The Bollinger bands work best when it is used together with an oscillator like the stochastic of RSI. The upper and lower bands demonstrate the range that the currency is ranging and there are a few ways you can trade using this range.

1) Reversal Trading: When the currency hits one of the bands, you should immediately check the oscillator to see if it is oversold or overbought. If the price hits the upper band and the oscillator is showing overbought, this is a good SELL signal and if the price hits the lower band with the oscillator showing oversold, it is a BUY signal.

2) Breakout Trading: If the Bollinger bands are moving in a narrow range, it is a sign of consolidation and you should be waiting for the sudden movement of the price to enter a trade. This is how you can make use of the bands to trade breakout.

The Bollinger bands is definitely a good indicator to have and you must learn how to make use of it to improve your trading strategies.

Read more...

Day Trading Forex With Technical Indicators

Day trading technical indicators are the representation of mathematical formulae a day trader can use to decide when to do the trading. Forex day trading involves buying and selling of various currencies with the goal of making a profit from the difference between the buying price and the selling price within a day.

The day traders employ different strategies like short term scalping where positions are only held for a few seconds or minutes or longer term swing and position trading, when they hold the position for the whole trading day. For their trades they follow one or more day trading technical indicators or develop a strategy based on a combination of many such indicators.

A day trading technical indicator is a series of data points that can be derived by applying a formula to the price data. Price data includes any combination of the open, high, low, or close over a period of time.

Some technical indicators may use only the closing prices while others incorporate volume and open interest into their formulas. The price data is entered into the formula and a data point is produced, which in turn creates the indicator.

The list of day trading technical indicators is practically endless. There are Absolute Breadth Index, Bollinger Bands, Bull/Bear Ratio, Candlestick Charts, indicators based on Dow Theory or Elliot Wave Theory, Envelopes, Fibonacci Levels, MACD, Moving Averages, TRIX, Weighted Close, and many more. All these can be used as a day trading technical indicators with slight or no modifications.

For example, the absolute breadth index or ABI is a market momentum indicator which shows the activity, volatility, and change taking place in the market without paying attention to the direction of the prices. High readings implicate active markets. As a day trading technical indicator, it can predict future direction if combined with other indicators.

Bollinger Bands on the other hand are a kind of moving average envelope. It exist at standard deviation levels above and below the moving average and generally stay within the upper and lower bands. As a day trading technical indicators, it predicts the future market movements. Fibonacci numbers with 4 theories - arcs, fans, retracements, and time zones, which highlight reversals in trends.

Day trading technical indicators has three functions-to alert, to confirm and to predict. So a trader can never miss a trading opportunity or run into loss if he or she can use the indicators judiciously.

The best approach will be to develop a strategy based on more than one indicator. Learning how to use these indicators is more of an art than a science. Through careful study and analysis, a day trading technical indicator can be developed over time, but they can never be full proof.

Read more...

Currency Trading For Beginners Made Easy

If you are a new trader looking for currency trading tips, this currency trading for beginners article is definitely one you should not miss. As a beginner, it can be quite tough as you are not well versed in the arena of forex trading. Therefore it is extremely important for you to have a good education so that you can have a good foundation in future.

Currency trading is not as simple as what you have seen in the advertisement. It is not something that can make you money with the click of a button, it requires you to put in time and efforts to learn and practice until you manage to get it right. Therefore I have decided to write this currency trading for beginners article to share with you things that I know.

Below are some of the things you need to learn as a beginner

1) Trend Line - The trend line forms the fundamental of trading and it is something that all currency traders must know. The trend line represents an area of support and resistance where the bulls and bears fought for territory.

2) Choice of Forex Indicators - There are over a hundred different indicators available for traders to use but it is impossible for anyone to use them all. Therefore you need to have a good understand of the various type of indicators in order to know which are the suitable one for your trading.

3) Types of Forex Strategies - As a trader, you definitely need to know the different ways you can trade the currency market. You can choose to be a breakout trader, scalper, range trader or position trader depending on your time availability and trading style. Therefore you need to spend some time to learn the various types of forex strategies and see which one suits your best.

There are a lot to learn in trading but the above are 3 most important things that you need to learn now in order to proceed. I hope that this currency trading for beginners article is of help to you by showing you the important things to take note so that you will not be lost.

Read more...

What is a Good FOREX Buy and Sell Indicator?

A good FOREX buy and sell indicator would be able to tell the correct signals when the correct time to buy or sell a particular currency would be in order. Thanks to a lot of technologies nowadays, these have now been made possible at the control of anyone who purchases a FOREX autopilot system. These are FOREX trading software applications that allow an individual to trade in the foreign exchange market in the comforts of their own homes.

A nice feature of these autopilots is that since they are programmed to detect the signals the instant they are made, these robots can take appropriate actions without the need for human intervention. In most cases, this is, by any means, faster than a human trader would be able to react and place a call to make a trade, thereby giving you an unparalleled advantage.

Another advantage this has is that it contains various programs of all trading indicators, which it assesses against collected data it picks up, analyzes from that trend, and then takes the appropriate measures to get you the best possible deal. This is where it excels over human emotion and uncertainty when making a trade, which sometimes is the cause of lost opportunity and the difference between making a profit and losing it.

In many instances, it is the fear of making the appropriate decision that tends to make a difference in successful trading. Multitasking is also a strong point of the FOREX robot. This is because it can do all the mathematical computations relevant to the data at hand, and it will always know the best time when to buy and sell even without human intervention. This gives you the opportunity to enjoy time with the family and delve into your other pursuits in life.

These FOREX robots already come prepared in their packages, and all you need to do is install them on a computer and make sure they are connected to the Internet. They show all the lists of indicators and the currency pairs you will be trading against in the software. After picking one, you need not make any adjustments to the program itself unless you want to make fine tunings yourself. Having a FOREX autopilot system installed in your home is the best choice you could ever make if you want to do trading with currencies. Since these robots also have the best FOREX buy and sell indicator systems equipped in their package, you have all the assurance of having the best tools for the job available to you.

Read more...

Forex Charts - Essential Indicators For Bigger Forex Profits

If you want to use forex technical analysis, then you will need to look at forex charts to decide where to execute your trading signals.

You will of course need to combine indicators to do this - Here we will give you some essential ones, to help you achieve currency trading success.

Before we look at how to use forex charts correctly, lets make two things clear.

1. Day trading

Do not even try and attempt it. The time frame is to short and all volatility is random, so you have no valid data and will lose. Day trading profits is one of the biggest myths of forex trading - Don't fall for it.

2. You can't predict market turns in advance

Forget the far out investment theories like Elliot wave, Fibonacci numbers, cycles etc that are supposed to repeat with scientific accuracy - they don't. If they did everyone would know the price in advance - so there would be no market.

Right lets move on and look at forex charts and how to get trading signals for longer term profits.

Determining the trend

You have a choice trend lines or moving averages.

The former are better, as you have more precise levels but there is no harm in using moving averages as back up.

Your main aim is to determine support and resistance levels and decide if they are going to break or hold.

Determining Price Momentum

You need to ALWAYS trade in the direction of price momentum. An accelerating price momentum through resistance for example would favour the bulls; if price momentum drops it favours the bears.

There are two essential indicators you can use and if you don't know what they are learn them - the stochastic AND Relative Strength Index ( RSI) - these are simply great indicators for helping you enter trades and take profits.

Determining Volatility

You need to know about volatility from the point of view of warning pf price reversals and determining targets and there is no better tool than the Bollinger band.

This indicator should NOT be used to generate trading signals but as a warning of trend change coming, or in determining targets there is no better tool.

Using trend lines to determine areas of support and resistance combined with momentum indicators to time entry and exit levels is all you need.

These are objective tools that tell you what to do - Ignore ANY Technical tool that means you have to make subjective judgements i.e Elliot wave or cycles -they will simply see you lose.

The indicators above are essential tools and if you learn about them and combine them, you will have a simple robust method t trend follow or swing trade and ALWAYS trade with the odds in your favour.

If you remember the above in relation to your forex charts, you can achieve longer term currency trading success.

Read more...

Why is it Important Use Forex Indicators?

Forex indicators are a series of data points applied to predict movement of currencies. It is a technical indicator containing following components.

♦ Stochastic Oscillator

♦ Relative Strength Index (RSI)

♦ Elliott wave theory

♦ Moving Average Convergence Divergence (MACD)

♦ Number Theory

♦ Gaps

♦ Chart formations

♦ Trends

Stochastic Oscillator:

It indicates the oversold and overbought conditions on scale of 0-100%. In uptrend, the closing prices concentrate on period range's higher part. While in downtrend, the closing prices are near extreme low level on period's range.

Relative Strength Index (RSI):

It is most popular in Forex indicators. The RSI is displayed in range between 0-100 and calculated by measuring the ratio of upward moves to downward moves. The instrument is considered overbought if RSI is 70 or greater, while a RSI of 30 or less, it indicates instrument oversold.

Elliott wave theory:

The theory is a way to analyze market, which depends on Fibonacci number sequence and repetitive wave patterns.

Moving Average Convergence Divergence (MACD):

This indicator requires plotting two momentum lines. The MACD line refers to difference between two exponential changing averages and trigger or signal line, which refers to exponential moving average difference.

Number Theory:

Fibonacci numbers is a sequence (1, 1, 2, 3, 5, 8, 13, 21, 34.....) achieved by adding first two numbers to achieve the third number in the sequence. The ratio between the smaller number and the next larger number is 62%.

Gann numbers:

The Gann numbers refer to methods developed by W.D. Gann to trade instruments, which are based on relation between time and price movement. These Forex indicators are hard to explain, as it uses angles in charts to ascertain resistance, support areas, and speculate the timing of future trend.

Gaps:

No trading is indicated on bar chart by spaces, which are called Gaps. These Forex indicators indicate the market conditions.

There are different types of indicative gaps in Forex indicators

♦ An up gap is displayed on the graph when lowest price of trading day is comparatively higher than highest high price of the previous day. It is a sign of strong market.

♦ A down gap is displayed on the graph when highest price of the trading day is comparatively lower than lowest price of previous day. It is sign of weak market.

Chart formations: There are different chart formations such as rectangle, head, shoulders, and triangle chart, which display different information related to Forex indicators.

Trends: They are Forex indicators that denote direction of prices. Rising peaks and troughs signify uptrend and falling peaks and troughs signify downtrend.

Read more...

What's the Best Forex Indicator? Your Own Eyes

Have you been on a forex forum lately?  If you have, then I am sure you probably have seen the endless amount of threads dedicated to the subject of indicators.  They'll talk about the new indicators, generic indicators, (moving averages, stochastics,etc..)  proprietary indicators, expensive indicators, etc....  They all want to know which is the best one?  I have a different question.  My question is does anybody talk about trading> anymore?

Think about why all these traders are seemingly infatuated with forex indicators.  It's because it does all the work for them.  It allows a trader to trade basically on autopilot (for a lack of better word). It allows a trader to just slap on a couple of formulas on a chart (which are lagging by the way) and all of a sudden they don't have to think about the market, because their indicators will tell them exactly when to buy or sell. Oh.....isn't that just fine and dandy.

Let me ask you a question. If the forex market can be traded so mechanically like this, why couldn't a child trade it? After all, the only thing they have to do is wait for their indicators to align.

Real trading requires both discretion and analysis from a trader.  The real way to look at a chart isn't when it's filled with indicators, its when it's completely bare. Looking at a simple bar chart will provide all the information you will need from a technical standpoint. All you have to do is open your eyes and pay attention.

Read more...