Thursday, January 17, 2008
Factory Forex - Custom Forex Indicator - The 3 Most Effective Indicators
Bollinger Bands - The basic interpretation of Bollinger Bands is that prices tend to stay within the upper and lower bands. The distinctive characteristic of Bollinger Bands is that the spacing between the bands varies based on the volatility of the prices. During periods of extreme currency price changes (i.e., high volatility), the bands widen to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The bands are plotted two standard deviations above and below a simple moving average. They indicate a sell when above the moving average (or close to the upper band) and a buy when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change. RSI (Relative Strength Index) - The RSI is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the RSI is to look for a divergence in which the currency price is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a failure swing. The failure swing is considered a confirmation of the impending reversal in the price of the currency. MACD - Moving Average Convergence/Divergence - Consists of two exponential moving averages that are plotted against the zero line. The zero line represents the times the values of the two moving averages are identical. The MACD is calculated by subtracting a 26-day moving average of a currency s price from a 12-day moving average of its price. The result is an indicator that oscillates above and below zero. When the MACD is above zero, it means the 12-day moving average is higher than the 26-day moving average. This is bullish as it shows that current expectations (i.e., the 12-day moving average) are more bullish than previous expectations (i.e., the 26-day average). This implies a bullish, or upward, shift in the forex rate. When the MACD falls below zero, it means that the 12-day moving average is less than the 26-day moving average, implying a bearish shift in the currency. You can be disciplined and in turn not give in to the trader s worst enemies (fear and greed). You can develop winning online platform trading strategies and have confidence in yourself and your system. How? Through a solid and proven strategies that are time tested and guaranteed. Think about it: A good forex trader with bad strategies is like Barry Bonds stepping to the plate with a broom stick instead of a 36 ounce Louisville Slugger. If you click on the link below you will find the best strategies in the business. If you are looking for a way to make consistent profits through a proven forex program then you have come to the right place: fxprofits.info Howard Teel is an experienced Trading Manager that has been involved in the markets for many years. He has been the President of two online trading firms.