Online Forex Trading
- Technical Analysis

Online Forex Trading - Technical Analysis

Technical Analysis is the study of price movement. You can use price charts to track the history of price movement and attempt to anticipate which way prices will go in the future.

Online forex brokers provide you with many different tools that are used in technical analysis. Some of the most common are listed below.

Bollinger Bands

Bollinger Bands are used to measure market volatility. They consist of three lines:

1. A simple moving average in the middle.

2. An upper band which indicates the simple moving average plus 2 standard deviations.

3. A lower band which indicates the simple moving average minus 2 standard deviations.

When market volatility is high, the bands spread apart. When volatility is low, they come together. 

The Bollinger Bounce
Most of the time, the middle band stay in between the outer bands. Think of the outer bands as the border patrol. When the middle brand approaches one of the border guards, it gets bounced away and back towards the middle. Hence the name Bollinger Bounce. This is useful to know because if you see the middle band approaching an outer band, there's a good chance it will bounce off.

This strategy works best when prices are fluctuating and there are no clear trends.

The Bollinger Squeeze
A good way to spot a trend early is the Bollinger Squeeze. When the bands squeeze close together, it often means that a breakout is about to occur. If the middle band breaks through either the top or lower band, the trend will usually continue to go in that direction.

Parabolic SAR (Stop And Reversal)

The Parabolic SAR indicator is used to spot trend reversals. It is perhaps the easiest indicator to read, Dots are placed on the chart in positions either above or below the candles (the formula that calculates where the dots go is too complicated to get into).

Dots above the candles are a signal to sell.

Dots below the candles are a signal to buy.

Parabolic SAR works best when there are clear upward or downward trends. It does not work well when price movement is small.


Stochastics is an indicator that is used to measure overbought and oversold conditions in the market. It consists of a scale from 0-100. As the stochastics lines are above 80 it means that the market is overbought and a downward trend could be forming. When the lines fall below 20 it means the market is oversold and an upward trend may be forming.

Stochastics are useful in determining when to lock in profits and when to issue buy or sell orders. But you should never rely on only one indicator. Combine several and adjust them to your trading strategy.


Browse Categories:
Stock Trading
Forex Trading
Commodity Trading
Options Trading
Day Trading
Technical Analysis
Real Estate Investing
Bonds Investing
Finance / Economics
For Your Trading Room
Online Forex Trading Tips
  Currency Trading  
  Introduction to Forex  
  Reading Forex Quotes  
  Understanding Pips  
  Types of Forex Orders  
  Understanding Margin and Leverage  
  Avoiding Failure in the Forex Market  
  Calculating Profit and Loss  
  Choosing a Forex Broker  
  Forex Trading vs The Stock Market  
  Forex - Fundamental Analysis  
  Technical Analysis  
  Fundamental vs Technical Analysis  
  Traits of Successful Forex Traders  
  More About Forex Trading...  
Online Commodity Trading Tips

Commodity Trading

  Intro to Commodities - Part 1  
  Intro to Commodities - Part 2  
  Commodity Exchanges  
  Financial Indexes  
  Commodity Types  
  Reading Commodity Prices  
  Commodities - Margins  
  Commodities - Leverage  
  Trading Coffee  
  Trading Silver  
  Trading Uranium  
  Trading Soybean  
  Trading Oil  
  More About Commodities Trading...  
Online Options Trading Tips

Online Options Trading

  Options 101  
  Calls and Puts  
  Options Trading 101  
  Options Trading 102  
  Options - Risk Management  
  How To Read Options Listings  
  Trading Strategies - Basic Concepts  
  Trading Strategies - Profit and Risk  
  The Greeks - Part 1  
  The Greeks - Part 2  
  Values and Prices - Part 1  
  Values and Prices - Part 2  
  More About Options Trading...  
Real Estate Investing
  Real Estate Investing  
  Getting Started in Real Estate  
  Questions To Ask Before Investing  
  Real Estate - Your First Time  
  Finding and Evaluating Property  
  Inspections Save You Money  
  Cheap Repairs, Big Profits  
  Keep Your Cash For A Rainy Day  
  Insurance and Risk Management  
  Managing Risk - Part 1  
  Managing Risk - Part 2  
  More About Real Estate Investing...