Bollinger Bands ® Forex Strategy for More Pips : Price Analyses

Bollinger Bands ® Forex Strategy for More Pips

Bollinger Bands have many useful applications in forex trading. As a volatility indicator, Bollinger Bands can help you visualize the volatility across different currency pairs. The bands can also help you spot entry and exit points and set profit and stop-loss zones.

As forex is often a volatile trading environment, the use of Bollinger Bands can help you make better trading decisions for more pips per trade.

Bollinger Bands Forex

Tips:

  • The Bollinger Bands are based on an upper and lower standard deviation along with a moving average.
  • The bands widen and contract depending on price action and volatility.
  • In forex especially, prices will have a tendency to bounce between the upper and lower bands.
  • If going long on a currency, it’s useful to set a stop loss just below the lower band.

How to trade with Bollinger Bands for Forex

Getting started with Bollinger Bands in the forex market is surprisingly simple. One common strategy is to buy when the price touches the middle band and sell once it reaches the top. Another strategy is to buy when the price reaches the middle.

You should keep in mind, however, that trading based on Bollinger Bands alone is not a complete strategy. You should also take into account the currency pair’s momentum, volume, and overall trend before entering into a position.

For this reason, it’s best to pair the Bollinger Bands with other indicators such as the MACD, RSI, and the accumulation distribution line for more reliable trades.

The Bollinger Bands are nothing more than a moving average and two envelopes set at two standard deviations of the charted price. This means that it does not take into account other important factors that go into making a trade successful.

For more information on how to create a well-rounded trading strategy using Bollinger Bands and other indicators click here for a full guide on the subject.

Matthew North

I have a passion for trading, behavioral finance, technology, travel, and writing. Contact: matthew@priceanalyses.com.

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