The concept of the Bollinger bands was introduced by John Bollinger in the '80s. It quickly became one of the most commonly used tools in market analysis.
Bollinger bands techniques employs three bands - an upper, a middle and a lower band that are used to highlight extreme short-term prices in a security. In our case we are talking about the price of a currency. However, the theory is applicable to the general stock market.
The upper band represents overbought area, while the lower band shows you when the currency is oversold. Many traders combine the Bollinger band techniques with other methods to get a better picture of the current state of a market. Consider a simple example that uses the Bollinger bands alone.
The automatic trading and trading algorithms are common for contemporary forex traders. Neural networks (NN) are gaining popularity within the forex trading community due to their simplicity and efficiency. That is why it is important to understand the principles of NN and recognize their limitations. It is equally important to dispel the myths and misconceptions about the NN as the supernatural force capable of predicting the future.
The slippage is a difference between the price level we ask and the level we get during the execution of your trade. These differences are inevitable due to continuously changing market and will occur at the times of strong instability, for instance, due to important economic news or when the active trading hours of forex sessions overlap. The slippage can also occur if the broker with floating spreads suddenly changes it.
The success trading includes three components : 1) A set of High Probability Indicators (HPI) to produce High Probability Trades, 2) Consistent implementation of your trades 3) Appropriate management of those trades.
High-Frequency-Trading or HFT is a trading technique using sophisticated numerical algorithms implemented on high-end computers that run the trading orders within milliseconds. The term high frequency originates from this. Compare that to traditional trading houses and banks. As a matter of fact, HFT is still a buzz word and still the term is a mystery and extravaganza.