One of the most important parts of Forex education for any Forex trader with a & # 39 is a standard deviation of understanding of the concept of price volatility and use to their advantage.
If you understand the concept, you can easily apply it to the Bollinger bands to a & # 39 are an important tool for all forex traders.
Let's understand why Bollinger band is so useful and profitable when they come into your Forex strategy.
If you do not know what the standard deviation, simply check out our article on the concept of – well, let's see Group Bolingera.
Bands defined Bolingera
Bollinger bands – it's just a band of volatility, which are drawn on each side of the moving average.
You want to Bollinger bands using the standard deviation of prices over the same period that the moving average price, then pounce volatility ranges above and below the moving average.
Moving averages are used to identify the primary trend rates, and Bolingera band make this a step further:
The combination of the moving average of currency with individual market instability (or standard deviation) – it creates an envelope for trading – with the average price average (moving average and 2 x ranges (expansion or contraction) in any direction, reflecting volatility or standard deviation.
If prices are removed from the long-term average, standard deviation increases – and hence the bands will fluctuate in various amounts, relative to the average.
Why do they work
In any market, the cost gandlyuemay currency tends to rise slowly over the long term.
Prices may soon jump sharply, but usually return to the long-term moving average – which is the fair value.
Standard deviation of external bands (as they are far from the average value) shows how far the values from long term rates.
Most price spikes caused by trader psychology, with greed and fear to the fore, and it can be detected Bolingera groups.
So, you must use the group Bollinger?
There are 3 main ways to use them.
1. Spot price hikes
If the bands are far from the average, you can use the Bollinger as a return signal bandwidth on existing trades or to use them to determine the conflicting transactions.
2. Enter the current trends
If you have a good trend in the currency markets, you can take advantage of the failure of the middle band, to buy at a fair price.
3. Introduction of new trends
If prices traded in close range and begin to make its way to the change in volatility can & # 39 with a new trend appears.
Bollinger Bands can certainly give you a new dimension to your trading strategies in the Forex market, and any currency trading system can take advantage of the additional information that they can give you.
a word of warning
As with all technical indicators, you should not use Bollinger bands in the single-player mode to enter trades, but in conjunction with indicators such as, for example, stohastychny or RSI, then you have a powerful combination for greater currency earnings.
With regard to education in Forex, knowing that such a standard deviation, and how to apply the concept through Bolingera band, will give you a huge trade advantage, so make sure you use them.