Posts Tagged ‘The Best Indicator for Forex’
If a person really wish to enter the biggest trading market, FOREX market and is waiting for an obvious point at which he can enter then for the long time he will find himself sitting at the sidelines, being useless, doing nothing. If a person studies certain indicators for FOREX before start trading then for choosing profitable times he can determine suitable strategies. These indicators give strong signals of buying and selling if they are continually monitored. If a person makes an investment then he tries his best to minimize the risk of loss and this can only be done if the data are strongly analyzed. These indicators analyze the data and help in minimizing the risk of potential.
There are many indicators for FOREX Trading that can be used to analyze the data but the most commonly used and the most popular indicators for FOREX are mentioned below:
• Moving Average Convergence Divergence. (MACD)
• Slow Stochastic Indicator.
• 200 Exponential Moving Average.
Moving Average Convergence Divergence (MACD) is one of the most powerful indicator and most reliable indicator amongst many indicators for FOREX Trading. It is an indicator for FOREX Trading developed by the person who has written around 12 books regarding investment strategies, Gerald Appel. MACD is in fact a very simple tool to use. What it does is that for the past data it analyzes and displays chart. It is also knows as ‘lagging indicator’.
MACD can also be used as a leading indicator at times which helps in predicting the next movement of the prices. The difference occurring between any two moving averages at certain time is calculated and displayed by MACD. Moving averages moves as the market moves. For MACD, 12,26,9 is the standard indicator setting. This setting is used in numerous trading systems. For both, faster and slower moving markets, this setting of MACD is considered to be most suitable, even by its developer Gerald Appel. 12 EMA (Exponential Moving Average) and 26 EMA are considered as standard.
The second well-known indicator for FOREX Trading is Slow Stochastic Indicator. It is especially used by traders for their entries and exits. It is developed by George Lane. It is a momentum oscillator and it consists of two lines known as %K (Fast line) and %D (Slow line). The scale on which it is plotted is between 1 and 100. In Stochastic, when the lines pass through ‘trigger levels’ it suggest the overbought or oversold of the market.
200 Exponential Moving Average is the third widely used indicator. They measure the average movement of price during a certain time period and it simply smoothes out the data of price which allows us to see tendencies and market trends.
All these are great indicators but a trader should not just rely on one instead he should use all of them as a confirmation before taking a perfect move.
There are numerous indicators from which you can choose any one. You can consider any indicator to be the best indicator for FOREX. But there is only one condition; you should know how to use them. If you know how to use them then only they are useful but if you just sit and watch them making guesses about what signal means then even the best indicator for FOREX is totally useless to you.
Many traders consider a particular indicator to be the best indicator for FOREX just because that indicator is widely used by many other traders and is extremely popular among them but the truth is that there is a variety of indicators and you should consider that one best which you think is most useful to you and is helping you in gaining maximum profit.
There are certain categories of indicators and those categories have sub-categories of many other indicators. The following are the categories from which traders choose an indicator which is actually the sub-category of these indicators and they consider them to be best indicator for FOREX:
• Trend indicators.
• Volatility indicators.
• Volume indicators.
• Cycle indicators.
• Bill William’s indicators.
• MT4 indicators.
• Indicators for Account Monitoring.
According to my research you can’t consider a particular indicator to be the best indicator for FOREX. A trader should make a good set, a good combination of indicators and then trade. This helps the trader to minimize his loss and give more assurance on making maximum profit rather than just relying on a single indicator and considering it to be the best indicator for FOREX.
Now, you must be thinking that how you should make a combination of FOREX indicators which you could consider to be the best combination. Your goal is to pick a set of best indicators. In a very smart way you have to combine indicators, it’s your challenge. This means that indicators present in your combination should not show duplicate signs instead they should confirm each other by showing different type of data regarding market.
It does not help in trading better if two o more indicators of your combination display identical information about prices. And one can’t call it ‘signal confirmation’ as many traders do so because it could be the same type of data in reality so it should be called ‘duplication’.
Too many indicators should not be chosen from the same category I mentioned above because then there is a high chance that you’ll pick those who have similar studies.
So if you really think that there is a single best indicator for FOREX then forget it and face the reality that you should have a good combination of indicators.