Bollinger Bands ® are among the most reliable and potent trading indicators traders can choose from. Indeed Forex brokers are important as they are the ones responsible for offering services such as high leverage to amplify returns and guaranteed stops to protect capital. Setting the stop loss in this advanced Bollinger band trading strategy is pretty simple.
If you are a fan of using the breakout strategy, the forex bollinger bands
is one indicator that you must have in your trading plan. Since the tendency is for the price to move from one outer band to the other outer band, is even more likely that the price will at least move to the moving average line after bouncing off an outer band.
The Bollinger Bands are the wiggerly" lines tracking above, below and through the middle of the candlesticks. As for their functions, Bollinger upper band and Bollinger lower band are responsible for measurement of deviations while the Bollinger middle band measures intermediate-term price tendency, which is just a simple moving average.
Every Forex broker offers its own terminal, however the most part of brokers and traders concur in choosing MetaTrader 4 and MetaTrader 5 terminals. Below is an example of the double bottom outside of the lower band which generates an automatic rally. In trading, if prices go above or below the Bollinger Bands, those readings of price action are unusual, and prices should revert back to normal" or inside the bands, if not all the way to the median.
You can close half position of your trade when price touch middle band ie 20 Simple moving average. In this class there is a student who loves to use Bollinger Bands® as his own odds enhancer when trading, so I thought I would share a few helpful tips for this tool, applied to the spot forex market.
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Forex market is high-yield and risky mean of taking profit by operations with the currency rates. Once the indicator is set up and seemingly working well, there will still be periods where the indicator has a tendency to produce false signals During low volatility times, the bands will contract, especially if the price is moving sideways.
Most technicians will use Bollinger Bands® in conjunction with other indicators, but we wanted to take a look at a simple strategy that uses the bollinger bands and oscillator stochastic to make trading decisions. If so, you have a short trade setup (sell signal), and you can go short (sell) at close of the candlestick which has broken below the BB1 lower band.
These settings are great if you are trading on daily or weekly charts, but John Bollinger himself suggests that when DAY TRADING you should shorten the number of bars used for the moving average. This lesson will show that unlike standard Bollinger Bands, Double Bollinger Bands are exceptionally useful in strongly trending markets, because they help us to better determine the true momentum shown within the candlestick price action.