July 31, 2017 at 8:53 am #1121
Indicators are very much popular among the retail forex traders. You will not find a single person who doesn’t know about the indicators in forex. Indicators help the traders to find the quality trading signals. But very few traders can actually use the indicators in the right way. Even most of the novice traders don’t know the basic functionality and use of the indicators. They simply think it as one of the best trading tools to execute their orders. Some traders even overload their trading charts with many indicators to get more different readings. But taking many readings from the different kinds of indicators will not ensure your profit in forex. Today we will tell you some very important facts about indicators and its use in the forex market. After reading this article your whole view on indicator will be changed. And if you can use the indicators in the right way then you can easily make a huge amount of money just like United Kingdom traders.
Types of indicators
There are two type’s indicators in the forex market, the leading and the lagging indicators. The leading indicators will always give you early trading signals that mean the possibility of generation false trading signals is very high. On the contrary, the lagging indicators will give you late trading signal and this will result in late trade execution. So basically neither of them will help in your trade execution. Those who don’t know about this basic detail of the indicators always try to trade with indicators reading and thus fails to make money. So make sure that you are considering indicators as your helping tools. Use it to find the false trading signals from the market.
Use the indicators in the higher time frame
Indicators should always be used on the higher time frame. When you trade the exchange traded funds you need to know that if you trade the lower time frame then the quality of the trading signals will be extremely poor. The novice traders often use the indicators in the 1 minute or 5 minute time and thus get the victim to many false spikes. But if you use the same strategy in the higher time frame like 4 hour time then you will see a dramatic improvement in your trading performance. And also make sure that you are not trading the market based on indicators reading only. Try to use the support and resistance level to find the sweet trading spot. And never execute any trade by risking more than 3 percent of account capital by using the indicators.
Helps to find the trend
The trend is your friend in the forex market. Those who try to trade against the trend always loses money and they blame the market. But they don’t realize the simple fact and rule that without trading in favor of the trend no once can make a consistent profit. The 100 day and 200 day moving average is one of the most widely used indicators in the forex market to find the prevailing trend in the market. If the price of a certain asset trades above the 100 or 200 days moving average then it’s considered to be in an uptrend or else the trend is down. Not only this, the SMA in the forex trading chart also acted as excellent support and resistance level. But instead of setting up pending orders at the dynamic support and resistance level the professional traders prefer to use the price action trading signal. They wait patiently for the formation of the reliable price action candlestick pattern to execute their orders in favor the trend.
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