About Trading Forex Bollinger Bands

Released on = July 8, 2006, 11:07 am

Press Release Author = Day Trade Forex, LLC

Industry = Small Business

Press Release Summary = Bollinger Bands are designed to capture the majority of
price movement. When prices move beyond the upper or lower band, they are considered
high (overbought) or low (oversold) on a relative basis.

Press Release Body = Contracting bands warn that the market is about to trend: the
bands first converge into a narrow neck, followed by a sharp price movement. The
first breakout is often a false move, preceding a strong trend in the opposite
direction.

A move that starts at one band normally carries through to the other, in a ranging
market.

A move outside the band indicates that the trend is strong and likely to continue -
unless price quickly reverses.

A trend that hugs one band signals that the trend is strong and likely to continue.
Wait for divergence (when the price is flat or rising or falling, but the MACD
Histogram is going in the opposite direction...the price will break out in the
direction of the MACD Histogram) or a Momentum Indicator to signal the end of a
trend.

I use the BB\'s for indication of when a breakout or breakdown is imminent. When the
outside bands get very narrow, it means the price is consolidating and is getting
ready for a breakout, either up or down.

At this point, it\'s dangerous to have a position because you don\'t know if it\'s
going to break up or down. When the bands get very narrow, it\'s almost better to
close out your old positions, even at a loss, until you see a clear direction. If
you don\'t want to close out an old position at a loss, at least hedge it.

The BB\'s can\'t tell you which direction the breakout will be, the MACD Histogram
will do that, and I always trade in the direction theMACD Histogram is going.

Bollinger Bands are designed to capture the majority of price movement. When prices
move beyond the upper or lower band, they are considered high (overbought) or low
(oversold) on a relative basis.

A Super Advanced method of using BB\'s is to use two sets of BB\'s, both with the
middle band set at 18. Set one BB to a standard deviation of 3 and leave the other
standard deviation at 1. This gives you 6 short term support/resistance lines to
work with. Your initial stop and target are the outer bands, and your inner bands
are used for your trailing stop and short term resistance and support. You can also
trade off the two inner bands.

This method is very similar to using Fibonacci OR Average True Range (ATR), but is
much easier to use and understand.

About the Author
Cynthia Macy has been trading various markets for over 12 years but now concentrates
on the forex market and is the co-author of three forex trading courses. To learn
more about forex trading, visit:

http://www.daytrade-forex.com

Request the \'Trade of the Week\' to see actual trades using the trading methods and
strategies.


Please visit the author\'s other trading sites for more trading information:

http://www.daytradeforex.com/products.htm
http://www.professionalforextrading.info
http://www.successtrading2000.com
http://www.shortterminvestingsite.com


Web Site = http://www.daytradeforex.com/products.htm

Contact Details = Cynthia Macy or Erol Bortucene||2424 Pioneer Ave. Suite
405||Cheyenne ,
82001||$$country||||928-639-1330||daytradeforex@daytradeforex.com||http://www.daytradeforex.com/products.htm

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