If You Really Want To Make Money In Forex Read This
Low tech but consistent, this indicator delivers. I am talking about Bollinger Bands. Developed by John Bollinger, the Bollinger Band is widely used as a gauge of volatility. When price moves in a wide range, the band expands and contracts when price does not move as much.
The way to really make this indicator work for you is to think out of the box.
The suggested parameter by the developer is the 20 period BB. We will use the 8 period BB set to 2 standard deviations or 8,2 colored yellow or any color that you like.
We will also set a trend qualifier which will be the 49 period SMA colored purple or any color you like.
When prices are above the 49SMA, trade long especially if price is close to that line. When price has pulled away from it, you can trade counter-trend providing you let the BB tell you when its safe to do it.
So these are the rules for trading with the 8BB.
- Attempt long trades when price has closed above the 8MA in the middle of the band
- Attempt short trades when prices have closed below the 8MA in the middle of the band.
CAUTION!
Stops can be placed at the other end of the BB. If going short, place stops just above the upper lip of the BB. If price had closed below the middle MA, it should take etraordinary movement in price to take you out. Do not move your stop! If you are taken out, then you have been wrong. Look for the next trade.
If you are long, stops will go just below the lower lip of the BB.
To learn more about my techniques, please visit http://LEARNFOREXOPTION.COM
To your success and happy trading.
Olumuyiwa Ojo is a full-time spot forex and forex options trader. He writes about and researches techniques to make better trades.
Ojo lives in the Midwest.
