Which Indicator To Use?

buysellThere are loads and loads of indicators out there and so all the new Forex traders in Singapore are overwhelmed with the amount of information at their disposal and also at the number of indicators. They do not know which ones work and which ones do not and which ones to use and which ones not to use.

All the usual, well known indicators work well. In fact, that is why they are well known. But at the same time, don’t expect the indicators to tell you what the market is going to do. Indicators are like tools like the hammer, scissors etc. It is up to you to learn to use it and find out how best to use it. Like any tool, indicators can be used to make a lot of money and also lose a lot of money in Forex trading. It all depends on the person who uses it. Moreover, Forex trading indicators are always reactive and not predictive. They always tell you what has happened and not what is going to happen.

What Is The Best Trading Indicator Out There?

For those who are new in Forex, the moving averages are the best and the easiest indicator to understand and use. The MA crosses are one of the most frequently used systems as well. Of course, the MA is always lagging and so it is up to the user to find the best and most optimum use for it. Try to understand what it is and how it works and then find how you can use it to improve your trading. Moving average for N periods is just the average of the price for the past N periods. If the current price is above that, then it means that the current price is above the average and vice versa. The lesser the value of N, the more reactive the average is to the price. The greater the value of N, the more smoothed the MA would be. There are many types of MA like simple, exponential, linear weighted etc. and they are the most used indicators for trading systems. Throw in various types of MA with different periods on the charts and watch for patterns between the MA and the price and you will learn a lot.

Likewise, RSI is a very good indicator as well and if properly used, it can tell you the overbought and oversold conditions correctly to a large extent. It would be amazing to note how it perfectly matches the daily fib levels if you get the right parameters to the RSI. You don’t need to even see the fibs, just get the correct combination of TF and RSI and you can see the fib levels automatically. They just seem to know each other so well.

Try and play around with various indicators with various settings and time frames and find out the one which works best for you. There is no such thing as the best indicator. It is all how you use it and how comfortable you are with it.

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