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Forex Regulation -What does it mean?

Forex Regulation -What does it mean for brokers, IBs and strategy providers?

As it is legally defined, regulation is a rule of order having the force of law, prescribed by a superior or competent authority, relating to the actions of those under the authority's control. Find out more about Forex regulation and why choosing a regulated brokerage service is important and can have a significant impact on your trades.

Regulation in the Forex Market

The Foreign Exchange Market, commonly known as FX, or simply Forex – is the biggest and most liquid market in the entire world – with a daily trading volume of around US $5.3 billion. The market is active 24/7, but there is no centralized regulatory body to conduct and supervise the activity of all online forex brokers at all times. Ever since the internet was introduced, hundreds of forex brokerage websites started to appear on a daily basis, which made this industry very competitive, but extremely risky, too.

Regulation in the Forex Market is the one that ensures fair and ethical business behavior; and requires brokers to operate in strict compliance with its rules and standards. It is safe to say that being regulated is now a criterion for traders when choosing an online forex brokerage provider. Before you start forex trading and open an account with an online forex broker - the first thing you need to do is check if it is regulated!

Read more: Forex Regulation -What does it mean?

Trading with KAMA (Kaufman's Adaptive Moving Average)

 

KAMA (Kaufman's Adaptive Moving Average)

 

KAMA is a trend-following indicator that aims to serve multiple missions, for example, identify the trend and estimate key time turning points.

 

Introduction to KAMA

 

KAMA (Kaufman's Adaptive Moving Average)Kaufman's Adaptive Moving Average (KAMA) is designed to evaluate market noise and market volatility. The indicator was developed by Perry Kaufman in 1995 {Smarter Trading, Improving Performance in Changing Markets. New York: McGraw-Hill, Inc.}. You can use the KAMA indicator when trading with the MetaTrader4 platform, all you need is to download the platform and open an account with a Forex Broker.

 

KAMA Settings

 

The recommended settings by Perry Kaufman include KAMA(10,2,30).

 

There are two ways to use KAMA:

(i) A longer-term KAMA to define the overall trend (10,5,30)

(ii) A shorter-term KAMA for trading signals (10,2,30)

The second (shorter-term) KAMA can generate trade signals when price crosses above/below KAMA.

Read more: Trading with KAMA (Kaufman's Adaptive Moving Average)

A Quick Guide to Bollinger Bands

A Quick Guide to Bollinger Bands

Technical Analysis -Bollinger BandsTechnical analysis is considered by some, essential for success in the Forex market. One well-used indicator often used to measure volatility is Bollinger Bands.

This is a tool invented by a well-known technical trader, John Bollinger in the 1980’s, whereby two Bollinger bands, the price of the currency and a simple moving average are plotted onto a chart. An upper and low band are placed two standard deviations away from the moving average.

The chart easily displays trends; widening bands show high volatility whereas contracting bands indicate low volatility. When the bands squeeze the moving average, traders in the future will expect increased volatility and opportunities to enter the market. In a vice versa scenario, when the bands are widening traders would expect lower volatility and opportunities to exit the market.

Traders tracking price movements have concluded that when close to the upper or lower band the market is overbought or oversold. The bands can be used as support (upper boundary) and resistance (lower boundary) lines signaling when to enter and leave a market. Most price action occurs within the two bands; only in extenuating circumstances such as a major event will a breakout occur.

 

How to Use Bollinger Bands

Bollinger Bands are an accurate measure of the market’s performance its focus on volatility keeps the indicator adjusting to market conditions. In addition, traders trawling through price data only need to look within its two bands. Furthermore, this indicator can be applied to virtually any security or market.

As useful as the data is even John Bollinger, the architect of Bollinger Bands, advises that the indicator should be used in conjunction with others to find more direct market signals. Most standard charting packages will include a Bollinger band indicator. However, some charting packages, such as MT4’s charting package, are notably superior to others.

Performance:

(1) Measure Market Volatility

(2) Identify Trend-Reversals

(3) Set Early-Triggers

(4) Evaluate Oversold/Overbought Market Levels

MT4 Settings: 20 Periods Simple Moving Average | 2 Standard Deviations

 

Bollinger Bands Calculation

Here is how each of the three bands is calculated:

 Upper Band = 20-day Simple Moving Average + (20-day Standard Deviation of Price x 2)

 Middle Band = 20-day Simple Moving Average

■ Lower Band = 20-day Simple Moving Average - (20-day Standard Deviation of Price x 2)

Calculating the %b {Default setting (5,1)}

■ %b = (Price ‐ Lower Band) / (Upper Band ‐ Lower Band) Read more: A Quick Guide to Bollinger Bands
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