If you trade, you know how important it is to be flexible enough. You have to react to the slightest changes in the market immediately. Otherwise, you lose money.
Thus, choosing a flexible and accurate indicator is one of the pre-requisites of your success.
One of such indicators is Bollinger Bands. It is one of the most loved and used indicators among the traders of all ages, experience, and budget.
It is never though enough to use just one indicator. If you combine it with one, or better even with several more indicators, you get higher chances to interpret their signals properly.
The Bollinger Bands is more efficient when the market is more or less established. When the price is going to the lower mark, it gives a bullish signal. When the price is heading to the upper band, it gives a bearish signal.
But when the market is just at the start of a trend formation, the Bollinger Bands might be not the best indicator to use. Thus, at least one more indicator is required to accompany the Bollinger Bands. One of the reliable indicators to accompany the Bollinger Bands is the famous MACD. If you use the Bollinger Bands and MACD? You can avoid critical mistakes when the market conditions are unclear. It has a histogram and two moving averages. It allows traders to follow the changing market trends. Those traders who know how to combine these indicators can benefit from any market movements.
Apply The Bollinger Bands And MACD Correctly
To trade, you select a particular time frame. Observe the signals that both indicators give. Compare them.
If you see that the prices are at the lower band of the Bollinger indicator, it might indicate the trend change. To avoid mistakes, check what MACD tells you. When the histogram moves above 0 or the line goes up the signal line, expect the bullish movement.
Advantages? There Are Several!
Combining these indicators comes with several benefits that are crucial to a trader:
● You get more accurate signals;
● You can assess the situation on the market more correctly;
● You avoid losing money constantly.
One of the main disadvantages is considered a need to observe the signals constantly. But, to tell the truth, this requirement is valid to just any indicator. Here though the advantages are evident.
Final Thoughts And Tips
There are many strategies, signals, and indicators to compare and follow. But whatever you choose, remember that there is no perfect strategy or a perfect indicator. Nothing can guarantee you constant earnings.
Not every strategy will work for you, either. Thus, before opting for something and investing a lot of money, check how it works for you. Start with smaller sum amounts. Test whether the option is suitable and convenient for you. Only if you see that you have found a perfect way to consider moving on with bigger sums.
Even though trading might be your main source of income, be very careful with your funds. Sometimes, it is better to keep that money rather than use it.