Watch Charts Like a Trader

October 12, 2017 10:51 AM
 
 

Mike Florez of Florez Trading relies on technical indicators to make his trading decisions. He tells AgDay host Clinton Griffiths that Bollinger Bands are a useful volatility indicator and a good tool for helping determine market opportunities over a short period.

"I view this as a short-term trading system lasting two to five days," says Florez.  "You buy something on Monday and maybe you're out of it by Friday." 

The chart tracks a 20 day moving averaging with complimentary lines or bands set two standard deviations above and below. 

"90 to 95 percent of all trading will stay within these bands," says Florez. "Where your opportunities lie is when the market escapes that {range} 5 percent of the time."

Escapes can happen either above or below the stand deviation lines or Bollinger Bands. Price moves above the bands mean it Is an opportunity to short the market while prices below are an opportunity to get in.

"That's when you have a chance to buy the market in a pretty low-risk situation," says Florez. 

He says the slope of the bands can help indicate a higher probability of getting the trade right. 

"When they're in very steep decline it's a warning sign," says Florez. "Where the higher trade probabilities come in is when the bands narrow or start going sideways."

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