Bollinger Bands As Online Forex Best Scalping Indicator.

For better understanding am going to compare trading to building a house. You wouldn’t use a hammer on a screw, right? Nor would you use a buzz saw to drive in nails. There’s a proper tool for each situation.
Just like in trading, some trading tools and indicators are best used in particular environments or situations. So, the more tools you have, the better you can adapt to the ever changing market environment.
Or if you want to focus on a few specific trading environments or tools, that’s cool too. It’s good to have a specialist when installing your electricity or plumbing in a house, just like it’s cool to be a Bollinger Band.

There are a million different ways to grab some pips! and Bollinger Bands is one of the best especially on scalping.
Bollinger Bands, a chart indicator developed by John Bollinger, are used to measure a market’s volatility.
Basically, this little tool tells us whether the market is quiet or whether the market is LOUD! When the market is quiet, the bands contract and when the market is LOUD, the bands expand.
Notice on the chart below that when price is quiet, the bands are close together. When price moves up, the bands spread apart.

   
That’s all there is to it. Yes, I could go on and bore you by going into the history of the Bollinger Band, how it is calculated, the mathematical formulas behind it, and so on and so forth, but I really didn’t feel like typing it all out.
In all honesty, you don’t need to know any of that junk. I think it’s more important that I show you some ways you can apply the Bollinger Bands to your trading.
Note: If you really want to learn about the calculations of a Bollinger Band, then you can go to www.bollingerbands.com.

The Bollinger Bounce

One thing you should know about Bollinger Bands is that price tends to return to the middle of the bands. That is the whole idea behind the Bollinger bounce. By looking at the chart below, can you tell us where the price might go next?

If you said down, then you are correct! As you can see, the price settled back down towards the middle area of the bands.

What you just saw was a classic Bollinger Bounce. The reason these bounces occur is because Bollinger bands act like dynamic support and resistance levels.
The longer the time frame you are in, the stronger these bands tend to be. Many traders have developed systems that thrive on these bounces and this strategy is best used when the market is ranging and there is no clear trend.
Now let’s look at a way to use Bollinger Bands when the market does trend.

Bollinger Squeeze

The Bollinger Squeeze is pretty self-explanatory. When the bands squeeze together, it usually means that a breakout is getting ready to happen.
If the candles start to break out above the top band, then the move will usually continue to go up. If the candles start to break out below the lower band, then price will usually continue to go down.

Looking at the chart above, you can see the bands squeezing together. The price has just started to break out of the top band. Based on this information, where do you think the price will go?

If you said up, you are correct again!
This is how a typical Bollinger Squeeze works.
This strategy is designed for you to catch a move as early as possible. Setups like these don’t occur every day, but you can probably spot them a few times a week if you are looking at a 15-minute chart.
There are many other things you can do with Bollinger Bands, but these are the 2 most common strategies associated with them.

Advancing online forex trading in Nigeria

I can vividly recount the advent of online forex trading in Nigeria. If I am that correct, I can date it back to 2006/2007. Laudable idea! Like any new business, Nigerians took to it en masse. But regrettably, it was a rush in, rush out thing.

The bane actually was lack of technical, experienced personnel to impart knowledge, direct and mentor trainee traders. I could recall a trainee of mine whom without a month experience opened a training centre on forex trading. He has crashed out permanently now.

Forex trading is lucrative but it requires sound knowledge and discipline. I am taking you through this because I have a vision to really impart knowledge to the populace as a contribution to self-empowerment programme and self-employment as well.

But what really brought about this article is that when you decide to empower people, you directly or indirectly empower yourself. The feedback is one of this. One of my trainees over the weekend was on a website. A site I had shown them for fundamental and technical analysis and also economic snippets that affect forex market. He went under the education link and called me to alert me about a forex expo called Lagos Forex Expo and Conference, scheduled for the later part of this year. The first of its kind in Nigeria in the commercial and financial hub of Lagos. He pressed on me that he would like me to present a paper there as he sees my efforts in advancing the course of forex trading in Nigeria.

I went to the site and looked up what the expo will have for traders. But in the process, what struck me is the statistics of traders given there, which I guess the organisers must have done some serious homework to lay to that claim. It says there are over 300,000 active traders in Nigeria. That is a staggering figure to my amazement despite the hues and cries about online forex trading. With Nigerians, I know the geometric progression of this figure will soon be bloated. I also smiled to myself that I have been part of that contribution in terms of the response this column has generated since its debut.

Secondly, I read that the Securities and Exchange Commission is giving a backing. That will put a paid stamp to doubtful minds about the authenticity of forex trading in Nigeria and I look forward in due time for foreign brokers to give more recognition to us here in this part of the world, once our regulatory authorities come up with rules and guidelines. The influx of brokers will be better for our economy and will provide more jobs and opportunities.

Even though I do not hold the brief for the upcoming Lagos Forex Expo organisers, as a trader/trainer/market analyst and signal provider, I know it will do a lot of good to this profession. The line-up of invitees will definitely shore up the image of the career as it will bring together traders, trainers, agents, brokers, investors, financial institutions, government agencies and many others. The benefits will really be tapped into by a lot of Nigerians. It will definitely be a good turn around. I wish the organisers well and also congratulate those in this business/career for a ground breaking event.

Market analysis for October 7, 2013 (as of the time of finishing this article. Entries are at trader’s discretion and money management is advised). Analysis discrepancies may result due to forecast time and economic news.