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
Best Forex Indicator Combination
Before considering trading the foreign exchange market, you need to do your homework to see which forex indicators will work best for your currency trading strategy. Choosing the right forex technical indicators will make it easier for you to interpret data and make the best decisions for buying or selling currencies. Choosing technical indicators isn’t as simple as clicking a few buttons, but you also won’t need to spend all day managing your trades. Best Forex Indicator Combination
Before choosing which forex indicators will work best for you, understand the different types of indicators and how they are used. First there are trend indicators, which show three tendencies in price fluctuations; up, down, and sideways. Just as it sounds, trend indicators will help you implement your forex trading system by showing you the price trend over time.
Next there are volume indicators, which a forex trader uses to determine the interest of investors in the forex market. High volume generally suggests the beginning of a new trend, while low volumes may indicate that traders are uncertain or have no interest in the current market. The key to understanding your volume indicators is knowing when to act on what the data is telling you. Using volume indicator to execute your forex trading system is ok, as long as you remember that a rapid increase or decrease in volume could indicate a reversal, while gradual decreasing may just be held up by the rapid moves within the currency market.
Momentum indicators document the speed of currency exchange rates over time, while also tracking the strength (or weakness) of a trend as it moves over time. When using this forex indicator, it is crucial that you know that the highest momentum is registered at the beginning of a trend and the lowest point is registered at the end point. Interpreting data from forex momentum indicators, a forex trader will look for disagreements between currency exchange rates and indicator suggestions, which will tell you several things; Best Forex Indicator Combination
1. A directional divergence between currency rate and momentum tells you that a trend is weakening. 2. Currency exchange rates increase during weak momentum signals the final warning of a trend change. 3. Trend changes should be anticipated during sideways exchange rates and strong momentum.
Finally, we have volatility indicators that tell forex traders the size and magnitude of currency exchange rate fluctuations. There will always be periods of high and low volatility in the foreign exchange market, and these indicators will help you employ the right combination of forex indicators to turn a profit. Low volatility suggests that there is very little interest in the currency rate and lets you know that market is preparing for a big move. Markets with low volatility pave the way for breakout trades, which have the possibility of big profits.
Choosing the correct forex indicators that may be best for you is about finding the right combination of indicators that provide you with the information you’ll need to find success on the forex market. Avoid using too many indicators within the came category because they often provide forex traders with repeat information, rather than confirmation. Best Forex Indicator Combination