Indicators, Indicators which one should you use.

Opinions will vary and some may even get hostile like the indicator is a family member, so I will give you my opinion.

When I look at my metatrader navigator window there are so many indicators that a trader would get paralyzed from being able to even trade.  The reason for them is to help you figure out what the market is going to do. But that is easier to say than it is to do because an indicator is lagging and only tells you what has happened.

Let’s be frank here, we are not like some major institution that trades in the millions of dollars per  trade and that will affect price. We are like the Remora that latches onto the sharks belly waiting for it to feed so we can get some scraps. Once we realize where we fit in to the big picture we can then understand how we can survive in the big shark tank of the Forex Market.

Keep in mind that there are trends and that is why you should always follow the trend and you need to recognize that news will affect price drastically so you should avoid trading when there are major news events. Forexfactory is the place to check before you start your trading day, avoid the currencies that have major news announcements wait for at least an hour before you start.

So how can you tell what the market is doing? There is no better way than price action. Price action tells you what is happening right now and learning to read price action patterns is a more important thing to learn than what indicator to use.

You can become an expert trader and look like you are reading a crystal ball when you learn how to read price action and trends.

If you would like a copy of the candlestick pattern recognition you can download a free copy by clicking here.

There are a couple of other indicators that I like to attach to my chart. the 10, 35, 100 and 200 MA. Along with these moving averages I also include a Bolinger Band. WHY?

Simply put, the moving average especially a 100 and 200 help you spot points of resistance or support. And the 10 and 35 can also be used to confirm an enty condition. When you spot a candlestick pattern and it happens to line up with what the lagging indicators are showing it can help you to decide whether to get in on a trade or get out.

For example if you see a long trend and the price is approaching the 100 or 200 MA chances are it will bounce off and drop, this is a natural cycle in the market. Just load these indicators onto a chart and watch how things work historically. But you may want to wait for the price to bounce and get in with the trend after the reversal.

The Bollinger band helps to show what is happening to the price whether the momentum is strong or weak. There are patterns that you will learn from the bollinger bands that just add another layer of confirmation to your decision making.

Finally Trend lines are powerful indicators that help create or visualize patterns and direction. Typically breaks of trends lines are indicative of strong moves and your price action patterns should help you determine good entry points.

After all is said practice and study; look back and keep a trade journal. Get yourself a demo account and practice. Learn how these different indicators work with price action to tell you what is happening, and realize that in the Forex trading market there is no straight line, your job is to learn how to read what it is telling you.

I’ll end with this qoute from Jim Rohn: “Formal education will make you a living. Self education will make you fortune”