Bollinger Bands TMA Trend Forex Trading Strategy
Many forex traders are confused about momentum trading and trend following. Although the two scenarios can be different, they have a lot of similarities, which makes it confusing for new traders. Momentum is when the price is going strong in one direction. This means that the price is going in one direction and it is also moving far in that direction in a short period.
Trends move in one general direction, but they don’t have to move quickly. Price can move slowly and steadily in the same direction and it would still be called a trend. As long as the price is moving in a certain direction, it is still considered a trend. There are special candles that traders use to identify momentum. These candles have long bodies with very little wicks. This means that the price moved very fast in one direction.
On the other hand, traders identify trends based on price action by observing a constantly rising or falling swing point pattern. This means that although retracements do occur, the price is still moving in one general direction. Although technically different, both still have a lot of similarities. The only variation is speed.
As one trader puts it, “A trend is a run, and a run is a trend. The only difference is the timeframe.” Both strategies are implemented differently, but momentum entries do tend to result in a trend because price does tend to continue the direction of the momentum.
One of the benefits of trend following is that you don’t have to predict the market. You just have to follow the market and enter when the price is going in your desired direction. This makes trend following a much less risky strategy than trying to predict which way the market will move.
Bollinger Bands is a classic technical indicator that can be used in many different ways. Bollinger Bands plots three lines on the price chart. The middle line is a Simple Moving Average (SMA) line, which is usually set at 20 periods. The outer lines or bands are standard deviations shifted from the middle line, which is usually set at +/- 2 standard deviations.
The middle line is like a regular average line. It can help you see if the trend is going up or down, and how steep the slope is. The outer lines are like support and resistance. People who trade mean reversions use them to see when a market has been overbought or oversold, and that could mean the price might start to go the other way. Momentum traders use them to see when a market might break out, and that could mean there’s going to be a lot of change soon.
This indicator is based on standard deviations, so it can be used to identify volatility. When the bands contract, it means that the market is contracting. When they expand, it means the market is expanding.
The Bollinger Bands TMA Trend forex trading strategy can capture trend breakouts as well as reversals by combining the Bollinger Bands and the Triple Moving Average indicator.
Triangular Moving Average
The Triangular Moving Average (TMA) is a type of technical indicator that can help traders see the average movement of price. It is a modification of the moving average, which is a very useful indicator for identifying trends and trend reversals.
However, moving averages have a disadvantage: they can produce false signals during choppy market conditions. This happens when the market is very erratic, especially in a whipsaw situation.
The Triangular Moving Average (TMA) is a type of modified moving average that makes the moving average line much smoother. This is because TMA lines are double smoothed. The result is a very smooth moving average line that is very reliable.
The Triangular Moving Average is a type of technical indicator that can help traders see the average movement of price. It is a modification of the moving average, which is a useful indicator for identifying trends and trend reversals. The main advantage of the TMA is that it produces much smoother lines than traditional moving averages, which makes it more reliable during choppy market conditions.
The Trend indicator is a technical indicator that helps you see the trend of the market. It does this by plotting two lines on a separate window. One line is blue and the other is red. The trend direction is based on how these two lines overlap. If the blue line is above the red line, it means the trend is bullish. If the blue line is below the red line, it means that the trend is bearish.
This indicator can also be used to identify potential trend reversals. When the lines cross, it might mean that a trend reversal is happening. When the space between the lines gets bigger, it means that the trend is getting stronger.
The Bollinger Bands TMA Trend Forex Trading Strategy is a mix of two different strategies. The first is a trend reversal strategy, which happens when the middle-moving average line of the Bollinger Bands crosses the TMA line. This should also be confirmed by the Trend indicator lines crossing over. The second strategy is a momentum strategy, which happens when there’s a breakout from a market contraction phase.
A momentum candle should break outside of the Bollinger Bands in the direction of the new trend. This confirms the trend and momentum trade setup.
When trading this strategy, it is important to pay attention to market conditions. If the market is ranging, it is best to avoid this strategy. This is because a ranging market will produce false signals. The Bollinger Bands TMA Trend Forex Trading Strategy works best in a trending market.
The Bollinger Bands TMA Trend Forex Trading Strategy is a versatile strategy that can be used on any currency pair and time frame. The strategy uses the TMA indicator to identify the trend, and then uses Bollinger Bands to find trading opportunities. The strategy is best traded during the Tokyo, London, and New York sessions.
Here’s a look at the indicators and settings used in this strategy.
The TMA indicator is a versatile trend indicator that can be used in any time frame. The indicator is composed of three moving averages and gives traders a clear picture of the current trend.
• Periods: 36
• Apply To: 6
• Bollinger Bands
The Bollinger Bands indicator is a popular volatility indicator that can be used to identify trading opportunities. The indicator consists of three bands: the upper band, the middle band, and the lower band. The middle band is a simple moving average, and the upper and lower bands are calculated based on the standard deviation of the price.
• Bands Period: 45
• Power Period: 37
Preferred Time Frames: 30-minute, 1-hour, 4-hour, and daily charts
Currency Pairs: FX majors, minors, and crosses
Trading Sessions: Tokyo, London, and New York sessions
Buy Trade Setup
The Bollinger Bands TMA Trend Forex Trading Strategy is a very simple strategy that can be used to trade the trend. The strategy is composed of three indicators: Bollinger Bands, TMA, and Trend.
The entry conditions are: The middle line of Bollinger Bands should cross above the TMA line, the blue line of the Trend indicator should cross above the red line, and a bullish momentum candle should close above the upper Bollinger Band line.
The stop loss can be placed below the most recent swing low or at a level that seems logical.
The target can be set at a multiple of risk or based on Fibonacci levels.
Sell Trade Setup
The Bollinger Bands TMA Trend Forex Trading Strategy is a sell trade setup. The trader should look for the following conditions to enter a sell trade:
1) The middle line of the Bollinger Bands should cross below the TMA line.
2) The blue line of the Trend indicator should cross below the red line.
3) A bearish momentum candle should close below the lower Bollinger Band line.
The trader should enter a sell order on the confirmation of these conditions. The stop loss for this trade setup should be placed on the resistance above the entry candle. The trade should be closed as soon as the middle line of the Bollinger Band crosses above the TMA line or as soon as the blue line of the Trend indicator crosses above the red line.
Many traders use momentum breakouts with Bollinger Bands. This is a strategy that has been proven to work. To make the trade even more reliable, you can use crossovers of moving averages and a confirmation based on a trend indicator.
However, it is still important to be able to identify high probability momentum breakouts coming from market contraction phases. If you can do this, then you have a good chance of making profits with this strategy.