In today forex faq, we have a question from one of our fellow traders and below is the question
Hello Koon Hwee,how far bollinger bands are accurate in trading?
what deviation should be used?
The Bollinger Bands is a good indicator to tell the range of the market. If you are new to trading and do not know how to use the Bollinger Bands indicator, you can take a look at some of the blog posts I have written in the past.
As for how accurate this indicator is, I must tell all of you guys here in my blog that you can never trade profitably simply with the help of indicators. Trading is more than just indicators.
The problem with indicators is that they often produce false alarm signals that lead traders to losses. Therefore if you were just to rely on indicators to trade, then you will not be able to generate consistent profits in your trading.
A good trading strategy is one that consists of the following
1) You need to setup a set of pre trade condition to inform you that a trade is coming as it is impossible for a trader to stick to their trading charts for hours.
2) You will need a set of condition to help you identify false alarm that are created by indicators. For all my strategies, it comes with these condition to help me reduce the number of losing trades that are created by false alarm
3) You must have a precise entry and exit strategy that will help you to eliminate any guesswork in trading.
4) Lastly, no matter what strategy you use, you must only use strategy that has a good risk reward ratio.
Please feel free to email me at [email protected] if you have any question
*The comment section of my blog is down as it is in the midst of a redesign. Please bear with it and it should be up in another 2 weeks time ard end November 2017