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| | Post New Topic | | Technique – Bollinger Bands | Views: 198 | | Dec 27, 2008 5:13 am | | Technique – Bollinger Bands | # |
Anne Fonda | | Many times already you must have read there are many techniques which are used to predict the forex market behavior. One of the techniques used is Bollinger bands. These Bollinger bands are also called a technical trading tool and they are normally used in capital market including forex where it was created in early 1980s by John Bollinger. These bands was formulated and based on the need for adaptive trading bands and we identified that the market is rather dynamic not static that we widely believed at that time.
Bollinger bands are a chart of three curves drawn in relation to currency pair prices. The band situated in the middle is a measure of the intermediate-term trend and is usually a moving average (MA) that serves as the base for the upper and lower bands. Interval between lower, middle, upper bands is determined by the volatility of the market, normally the same data that were used for the MA. The default parameters are 20 periods and two standard deviations above and below the middle band and of course this may be adjusted if needed.
In brief, the main objective of Bollinger Bands is to give a relative definition of high and low prices. It would likely that the prices would go high if it touches the upper band and low accordingly. This relation definition is helpful for the use of forex trader. And it is used to compare price action when the trader wants to arrive at rigorous buy and sells decisions.
If anyone wants to learn more prediction technique please check out this:
http://www.avafx.com/
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