So how can you incorporate standard deviation in your forex trading? The answer is it is useful for:
1. Picking important market tops or bottoms i.e look for highly volatile prices that have spiked to far from the mean.
2. Targeting entries within trends - if for example, prices spike away from the mean to
far, they will fall back to the average eventually. If the trend is strong you can target entry at the mean price.
3. If prices are trading in a narrow range and suddenly high standard deviation pushes prices away from the mean, you can trade with the break.
If you want an easy tool to apply to help you apply standard deviation in your trading - looking no further than the Bollinger band. Most major chart services plot it and its easy to use – we don’t have time to explain it all here so see our other articles.
The Real Enemy for Traders
Is not picking trend direction, it’s entering with the best risk reward and dealing with volatility if you have understanding of standard deviation you will be able to deal with the enemy of volatility, harness and control it, and use it to achieve currency trading success.
1. Picking important market tops or bottoms i.e look for highly volatile prices that have spiked to far from the mean.
2. Targeting entries within trends - if for example, prices spike away from the mean to
far, they will fall back to the average eventually. If the trend is strong you can target entry at the mean price.
3. If prices are trading in a narrow range and suddenly high standard deviation pushes prices away from the mean, you can trade with the break.
If you want an easy tool to apply to help you apply standard deviation in your trading - looking no further than the Bollinger band. Most major chart services plot it and its easy to use – we don’t have time to explain it all here so see our other articles.
The Real Enemy for Traders
Is not picking trend direction, it’s entering with the best risk reward and dealing with volatility if you have understanding of standard deviation you will be able to deal with the enemy of volatility, harness and control it, and use it to achieve currency trading success.
0 comments:
Post a Comment