Best Forex Indicator Combination
The group of indicators outlined here are the best Forex trading indicators in my view and any trader novice or pro should know about them. They are all simple to learn visual indicators which are very effective. . .No indicator is perfect but if you learn how to combine the best and practice, you can build a robust Forex trading strategy for success. Here are your best Forex trading indicators and how you can use them for bigger Forex profits.
The Bollinger Bands
Developed by John Bollinger this indicator has the use of showing the volatility of a currency from the norm. You can soon spot overbought oversold levels, as volatility rises and trade into them. The middle band is a simple moving average and you can buy and sell back to it, in strongly trending markets as this area indicates value and this simple strategy is one any trader should know.The Bollinger band maybe one of the best Forex trading indicators – but you must confirm moves and for this you need some momentum indicators to time your trading signals. Let’s look at some.
Relative Strength Index RSI
Developed by trading legend Wells Wilder this is a great indicator you can use to gauge the strength of a trend. If the RSI is in favor of the trend, you stay with it, when it diverges from the trend, then its time to either bank profits or enter contrary trades. Best Forex Indicator Combination
Average Directional Movement ADX
Another indicator from Wells Wilder and like the RSI the ADX attempts to determine if the market is in a trend or not. The ADX line is a great momentum indicator and will help you trade and stay with the strongest trends. It also acts as a great indicator in terms of warning when a strong trend may change. A great profit taking signal is when the ADX rises above 40 and turns now. When this happens you can bank profits or look for contrary trades.
Developed by George Lane this is probably the best indicator to help you get better market timing and execute trading signals. Stochastic crossovers can confirm any move, within a trend and also be used to take contrary trades. In contrary trades, a stochastic cross with bullish or bearish divergence (from over bought or oversold levels) against the prevailing trend is very effective. Best Forex Indicator Combination
Price spikes don’t last for long and prices will return to a longer term average. In existing trends this tends to be around the 20 day average and in longer term trends, you can trail a stop back behind the 40 day moving average. This is a simple tool and every trader should use them for setting up entry and exit points.
They Work and Will Continue to Work.The above are the only indicators I use and I have been using them for 25 years. There still as effective today as they ever were. These best Forex trading indicators if used correctly can improve profits and decrease risk and that’s what all Forex traders need in their trading. Best Forex Indicator Combination
If you are a novice trader perhaps the easiest forex trading strategy to use is a swing trading strategy as it overcomes two problems that most novice traders face but cant overcome.
By using a swing trading strategy not only can you overcome these problems, you can give yourself a great chance of currency trading success.
Let’s look at this forex trading strategy in more detail
Most novice traders lack patience and they think the more they trade the better.
Most go for forex day trading which is probably the best way to lose money you can get – day trading simply does and cannot work, due to the fact all short term volatility is random.
You can never get the odds in your favour and you can never win – PERIOD.
Other traders however lack patience when long term forex trend following – they simply cannot accept the profits it wants to give them!
We all want profits – but when you sit on a long term trade and see open equity dips of thousands of dollars the temptation to take it is huge and most novice traders bank profits far to soon.
If you are forex trend following you need to take a bit more risk and that means hanging on for longer term gains.
Most traders simply don’t have the patience and discipline to do this and it’s hard even for pro traders.
Swing trading when incorporated in a forex trading strategy overcomes the problem.
You are looking at making profits in periods of 3 days to a few weeks, so you are never holding a position for long periods, and there are plenty of opportunities to keep the trader interested and finally, stop loss protection can be tight keeping risk low.
Forex swing trading is easier than long term trend following as you don’t have to be so patient, it’s easy to maintain discipline, which is the key to big forex gains.
2. Swing Trading is simple
Swing trading tends to be quite simple to learn.
All you need to do is look at support and resistance and use some momentum indicators to time your trades.
One or two timing indicators are all you need to judge price momentum as it moves into test support and resistance and your all set to swing trade.
Being simple to understand is a big advantage, because from understanding comes confidence and from confidence, flows discipline – the key to successful trading is having the disipline to foloow your plan through periods of losses and is a trait all succesful traders have.
So if you want to trade currencies then try swing trading its simple, easy on the mind and can be very profitable.
Consider it as part of your forex trading strategy and let it help lead you to the currency trading success you desire.