Forex trading indicators if used correctly with simple bar charts can boost your profit potential and reduce your risk; here we will look at how to incorporate them in your Forex trading strategy for bigger profits.
A key mistake most traders make is to think more is better and I have seen, some systems trying to use 10 or more indicators but this is doomed to failure. The best strategies are simple and have just a few indicators which makes the strategy more robust with fewer elements to break.
So what indicators should you use?
In my personal experience you need an indication of volatility and some momentum indicators to time your trading signals and that’s it and here I will look at a few of my personal favorites. All the indicators are visual, easy to learn and it will take you no more than a few hours to learn the ones below and this education could end up being, some of the most profitable education you will ever get, so let’s review them.
If you want to win at Forex trading you must understand how volatility affects price and be able to use it and a great indicator for doing this is the Bollinger Band, not only does it show you at a glance how volatile the market is, it also contains a 20 day ma ( the middle band) which you can buy and sell back to in strong trends.
To time the entry of your trading signal, the Relative Strength Index RSI and stochastic are ideal, as they can give you a warning of when momentum diverges from the trend. For example, in a strong bull trend, prices will be rising and these indicators will track price; but at some point they will turn down when they do, it’s time to book some profit or look to go short.
In my view the three Forex trading indicators above should be essential ones all trades should learn, there are many more of course but the above three, combined with a good understanding of the basic chart formations can be the basis of a winning strategy which can make a lot of money.