Forex trading is now one of the most sought after jobs for many people of all ages around the world. This is because the major advantages over other capital markets and high yield potential among these advantages is that it is very easy to access the trading platform best forex brokerage firms, with the internet, and therefore, you will see that the currency has a high liquidity, combined with high leverage.

However, brokerage firms and have a good trading platform is only part of what you should do your Forex trading career a winning and profitable. You must have the knowledge and skills necessary to accurately predict what the market will do. One technique used to predict the behavior of the Forex market is that based on Bollinger Bands.

Bollinger Bands This is what is called a bargaining tool and techniques are widely used in capital markets (including Forex) and was created by John Bollinger in the early 1980s. This band technique was developed based on the need for adaptive trading bands and the discovery that market volatility was dynamic, not static, like a thought at this time.

Bollinger Bands consist of a panel of three curves corresponding plucked currency prices. Band in the middle is the size of a medium-term trend and is usually a simple moving average, which is the basis for the upper and lower bands. The interval between the lower and middle band is determined by market volatility, typically the standard deviation of the same data used for the moving average. The default setting is 20 periods and two standard deviations above and below the middle band, of course, this can be customized to fit your needs.

In short, the purpose of Bollinger Bands is to provide a relative definition of high and low prices. By definition, the price is considered high by touching the upper and lower bands when you touch the lower band. Relative definition can be used by Forex traders to compare prices and stock as a useful indicator of the operator when the purpose is to buy and sell decisions strictly.