The software that merchants use in online trading platforms is more user-friendly than it was years ago. This is one of the reasons that the interest in Forex trading online is growing. The most preferred currency pairs by traders are EURUSD, USDJYP and GPBUSD.
My focus in this article is how to use the Bolling Tapes and the Stochastic Oscillator as a trading strategy. The Bolling Bands indicator is explained first, followed by the Stochastic Oscillator indicator. The last one explains how the two indicators work as a buy and sell signal.
Boling’s tapes consists of three rows in the currency chart. The first row is the line of the moving average. The second is the upper standard deviation and the third is the lower standard deviation. Bolling’s ribbons make up 95 percent of closing prices. The preferred moving average is 21 bars.
The sell and buy signals are when exchange rates cross the upper standard deviation and the lower standard deviation.
The stochastic oscillator also called Stochastic, is an indicator of momentum. The momentum indicator is an indicator that calculates the value of price changes over a period of time.
The stochastic was made by George Lane in the 1950s. The theory is that prices move back and forth like a wave. The waves move between the overbought level and the oversold level. The range is 100 percent, the level of overbought is the level of 80 percent, and the level of oversold is the level of 20 percent. If the waves are above 50 percent, the market is considered bullish, and if prices are below 50 percent, the market is considered bearish. It is a scourge when the market is about to rise. It is a bear when the market is about to fall.
The indicator consists of two lines. The stochastic line represented as% K. % K is calculated as current closing minus the lowest minimum. The result is divided by the highest value minus the lowest low and multiplied by 100. The second row is the signal line represented as% D. % D is a simple moving average of% K.
The stochastic is designed as a slow indicator and a fast indicator. The difference is that the fast indicator is steeper than the slow one.
How to trade the trading strategy? When traders have chosen to trade with this strategy, they look for specific indications in a purchase situation.
The indicators are:
1. The price line is outside the lower standard deviation.
2. Candlesticks are red and traders are looking for the first green candle.
3. The market is in the oversold zone.
4. The buying situation is when the candle sticks turn green.
IN sales situation the indicators are
1. The price line is outside the above standard deviation.
2. Candlesticks are green and traders are looking for the first red candlestick.
3. The market is in the zone of overbought.
4. The selling situation is when the candlesticks turn red.
This article presents a trading strategy based on Bolling’s bands and stochastic indicators. The strategy is easy to use and can be used by day traders who want to trade short trades such as 10 or 30 minutes.