What is forex trading?

Forex trading stands for foreign exchange trading which is referred to a currency exchange platform where currencies are traded. For conducting foreign trade, currency exchange is an important aspect. For dealing with buying and selling of good with other countries, currency exchange is required and that is why forex market is the most liquid financial market. The advantage with Forex is that there is no specific or central marketplace. It is open on all the weekdays for 24 hours. There are three methods by which Forex trading which is forwards market, spots market and futures market. This global decentralized market includes selling, buying and exchanging of currencies at prices which may be fixed or determined.

Top 5 trading strategies

Let's take a look at some trading secrets. These are some tips which are bound to help you trade successfully.

Periodic investing is one of the most efficient ways to trading.

Experts' advice beginners to put only 10% of their cash in short-term government bonds and the rest of the money should be invested in low- cost index fund.

You should have confidence while trading.

Most successful traders use simple strategies for trading, such as candlestick charts, technical analysis, and chart patterns. You must not let your emotions get in the way.

To be a good trader, you need to be patient.

Patience is one of the keys to success in any field. Before taking big decisions regarding trading, you should consider all the factors that are dependent on it. Trading opportunities come from time to time. Fretting over your losses is wastage of time. If our decisions are hitting losses consequently, then you need to stop trading for the time being.

Implementing too many strategies at once is not a good idea.

You must have a handful of strategies that you should use from time to time. Besides that, to master one strategy, it requires time and patience. You will not find changes overnight. In this way, you can find out your "bottom line" strategy.

A golden tip for any beginner in forex trading is to learn how to remain realistic and honest.

Honesty is the key to acing up the levels of forex trading. As you learn how to trade, you need to set your limits, be realistic about your goal and have a proper management of your bankroll. Another helpful pointer to help you remain calm and away from being anxious is to never check the results before the session is over. As you gain success throughout the session, you may find it highly attractive to focus on your bankroll more than your real motive. Hence, this diverts your attention and ability to focus.

Using bollinger bands to spot trends

Bollinger bands are a technical tool to study market trends. Studying price trends is very important for the traders to safeguard themselves against the losses due to price variations. Bollinger bands suggest whether price of a stock is high or low as compared to its previous trading value. Bollinger bands consist of an upper band, a lower band and an average generally a simple moving average. These bands are plotted using two standard deviations, one above and one below a moving average at centre. Prices are considered to be high at the upper Bollinger band and low at the lower Bollinger band.

  • Traders generally buy a stock when its price touches the lower band and exit by selling when the price touches the centrally located moving average.
  • When the upper and lower Bollinger bands are close to one another then they indicate low volatility and when they are far apart then they indicate a phase of high volatility. Volatility represents the variation in the price of a stock over a period of time and is measured by standard deviation method. Volatility Traders often sell a stock when the bands are far apart and buy when the bands are closer.
  • When the two bands run parallel to one another for a period of time then the price oscillates that is it keep bouncing between the two bands.
  • For better price trend prediction, the indications of oscillator type Bollinger bands are confirmed by studying non oscillator type indicators like chart patterns. If the other indicator confirms the suggestions of Bollinger bands then the traders are much surer about the price trends.

Many companies and traders have suggested that Bollinger bands are simple but effective tool for trading and its study reduces market pressure and saves the loss of traders from the market volatility.

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