Currency Trading Charts: Using Bollinger Bands

Bollinger bands on currency trading charts are used just as on stock and options trading charts, as an indicator to alert the trader to a new forming movement, breakout or trend. They are made up of three lines or bands.

The central band is a simple moving average over a certain number of periods, typically 20. The upper and lower lines are at a certain number (usually 2) of standard deviations calculated with reference to the number of periods used for the center band.

Bollinger bands were invented by John Bollinger in the 1980s. The idea behind them is that prices will normally remain within 2 standard deviations of the mean, which here is the moving average used to plot the central line. This means that as prices reach the upper and lower band lines, a reversal is indicated to keep the prices within the bands.

They are also an indicator of volatility. Wider bands indicate a more volatile market than narrow bands.
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Is Your Forex Broker Working for You?

People new to foreign exchange trading may be surprised to find that their forex broker may operate in some surprising ways. In fact, some companies offering forex trading services are not brokers in the traditional sense at all.

Traditionally a broker would work for you as a client, placing your buy and sell orders for you through their dealing desk and charging commission (for stock exchange transactions) or making their money from the spread (the difference between bid and ask prices) for forex trading. At one time orders would be placed by telephone. Now they are placed online, with you in full control of your account.

But standard forex accounts require significant investment. Typically the minimum deposit is anything from $10,000 to $50,000. Now that forex trading can be done from home, there are many new services springing up with lower deposit requirements, offering forex mini accounts. But their business model is not necessarily the same as traditional brokers, and this can have implications for you.

So these days, there are other types of companies that operate in different ways in order to provide services to the smaller investor. Most of these do not have dealing desks of their own.
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How (Not) to Lose Money With FX Currency Trading

Forex or FX currency trading is a risky business. Many people go into it with high hopes of getting rich and quickly find that it is easier to lose money in the foreign exchange markets than to make it. Even if you are ideally financed and have the best system, robot or plan, you may discover the sad fact that the one thing holding many traders back from success is themselves.

So in this article we look at some of the major pitfalls of forex trading and how to avoid them.

1. System hopping

One surefire way to lose money with forex trading is trying a system for a few days and giving up on it because it made a loss or two. Before you even start using a system you should be as sure as a person can be that it is going to be profitable. You have to accept losses and stick with it.

Remember that if you bail out every time that you are losing, you never give your systems a chance to put you back into profit. You will lose your shirt for sure if you hop from one system to another without giving anything a chance to work.
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5 Golden Rules on How to Make Money on the Forex Market

Just as there are rules and guidelines for forex trading strategies when you are learning how to make money on the forex market, there are also tricks for dealing with personal factors and habits that undermine our success. Here are 5 golden rules for handling ourselves so that we can move smoothly from hesitant beginner to successful forex trader.

1. Keep Cool

Successful traders do not let their trading depend on their emotions or their emotions depend on their trading. They do not risk more because they are feeling lucky, they do not hesitate when the signs are right, or pull out of a trade too soon out of fear. Equally, they are unlikely to celebrate a gain, nor will they sulk, shout or kick the dog when they lose.

A person who is ruled by their emotions will not make it as a forex market trader. Self discipline can be learned but make sure that you have fully mastered your emotions on a demo account before you think of going live. If you are still taking unplanned risks you are not ready for real trading.
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FX Charts: How to Use the MACD Indicator

The MACD or Moving Average Convergence Divergence indicator is one of the most popular tools on FX charts. It can be used either as an indicator in itself, or as a check when you are mainly relying on other tools.

The MACD chart measures faster and slower moving averages and whether they are getting closer together (converging) or farther apart (diverging).

When they are converging you will see the two lines on the chart approaching each other and the bars on the histogram at the bottom of the chart become smaller. This usually indicates that the current trend is coming to an end or has ended.

Of course the faster line reacts to a change in price movements more quickly than the slower line. So when a new trend forms, the faster line will get closer and finally cross the slower line. If it then separates or diverges from the slower line, this is often an indicator that a new trend has formed.
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Stochastic Indicator: What is It and How do I Use It?

The stochastic indicator is an oscillator that enables you to see at a glance the momentum of the market. Momentum is the pressure or weight behind the current trend. It is based on the idea that while prices are rising, the closing price will tend to be higher than it would be if the market was stable. Equally, when prices are falling, the closing price will tend to be low. From this assumption the oscillator measures when a trend is considered to have reached its limit and is about to turn.

The actual calculations are complex but fortunately you do not need to do them because most trading software will do this automatically for you. This means that you should be able to access the indicator plotted on a chart in your forex brokerage account.

The stochastic indicator will give you two lines that usually run fairly close together:
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