Forex Trade – Intelligent Forex

Simple Forex Trading Strategy

Posted in Forex Trading Strategies by intelligentforex on January 7, 2010
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forex-strategyIf you are looking for a simple Forex trading strategy which works you will like the one enclosed which is the choice of the professional trader yet, very few new traders use it but don’t let that concern you to much most traders lose money. Let’s look at this powerful Forex trading strategy and show you how and why it works.

The aim of any Forex trading system is to get the odds on your side and trade high odds set ups and our strategy does just that, as it will get you in on all the biggest trends and profits. If you look at any Forex graph, you will see long term trends but do you know, how they all start and continue?

All the biggest bullish market trends, start by breaking out to new chart highs and as the trend evolves, the currency continue to break through to new market highs. Look at any currency pair you like and you will see this is true – so the way to trade with the odds on your side and get in on the best trends, is to trade high odds breakouts.

So why do most traders simply not do this?

The problem most traders have is they don’t understand that Forex markets cannot be predicted but they try and predict in advance where a currency may go and this leads to disaster. They want to get in at the low, so they try and buy into support. The problem with this method is – they are hoping the support level will hold and that is not a great way to make money in Forex! As the old traders saying goes:

“A bottom picker becomes a cotton picker” and these traders all end up wiping themselves out.

The smart trader doesn’t predict, he waits for confirmation via a breakout above resistance; he simply takes the trading signal on the break, as a new high is made and he is then in a trade with the odds on his side; if the breakout is a good one there will be triple digit profits ahead and that’s what all traders want to achieve! So what is the definition of a good breakout?

A good breakout is one, where resistance has been tested and held a few times in the past and held. You should look for a lot of tests and in time frames, that are at least a few weeks or longer apart. The more times the resistance level has been tested and the wider the tests are spaced apart in terms of time, the higher the odds are and of a trend developing in the direction of the break.

Once the level gives way, stops are triggered and fresh buying comes in which sees the currency move, with accelerated momentum away from the breakout point.

This strategy is simple, you can use just look at levels of resistance and add a few momentum indicators, if you wish to help time your trades better and you then have a simple Forex trading strategy which can make you huge gains. All the best strategies are simple and robust and breakout trading, is a very powerful method, anyone can use to seek long term Forex trading success.


Bollinger Bands Can Give You a Huge Trading Edge Here’s Why

Posted in Forex Education by intelligentforex on January 7, 2010
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One of the critical pieces of forex education for any Forex trader is to understand the concept of standard deviation of price and how to use volatility to their advantage.

If you understand the concept you can easily apply it with Bollinger bands which are an essential tool for all forex traders.

Let’s look at why Bollinger Bands are so useful and profitable, when incorporated in your Forex Strategy.

If you don’t know what standard deviation is simply check our article on the concept – right, let’s take a look at Bollinger bands.

Bollinger Bands Defined

Bollinger bands are simply volatility bands drawn either side of a moving average.

You calculate Bollinger bands using the standard deviation of price over the same period as moving averages the mean price, then the volatility bands are plotted above and below the moving average.

Moving averages are used to identify the underlying trend of currencies and Bollinger bands take this one step further by:

Combining the moving average of the currency with the volatility of the individual market (or the standard deviation) – this then creates a trading envelope – with a middle mean price (moving average and 2 x bands (expanding or contracting) either side that reflect volatility or standard deviation.

As prices move away from the longer-term average, the standard deviation rises – and thus the bands will fluctuate in varying amounts, away from the average.

Why they work

In any market, the value of a currency traded tends to rise slowly over the longer term.

Prices can and do spike quickly in the short term, but will normally return to the longer term moving average – which represents fair value.

The standard deviation of the outer bands (how far they are from the mean) shows how far prices are from longer-term value.

Most price spikes are caused by trader psychology with greed and fear to the fore and this can be graphically seen with Bollinger bands.

So how should you use Bollinger bands?

There are 3 main ways to use them.

1. Spotting price spikes

When the bands are a long way from the mean you can use Bollinger bands as profit taking signal on existing trades or use them to spot contrary trades.

2. Enter exisiting trends

If you have a good trend in the forex markets then you can use dips to the middle band to buy at fair value.

3. Entering new trends

When prices are trading in tight range and start to breakout with a change in volatility a great new trend could be emerging.

Bollinger bands can certainly give you a new dimension to your forex trading strategy and any currency trading system can benefit from the extra insight that they can give you.

A word of warning

Like all technical indicators you should not use Bollinger bands in isolation to enter trades, however combined with timing indicators such as, the stochastic or RSI, then you have a powerful combination for greater FX profits.

With regard to forex education, knowing what standard deviation is and how to apply the concept through Bollinger Bands, will give you a huge trading edge, so make sure you use them.