What Is The Best Indicator For Forex?

What Is The Best Indicator For Forex Trading?

Introduction:

Everyone has a different trading strategy, different indicators they prefer and different methods of trading. However, there are more common indicators that are used throughout the trading community. This leads us onto our blog title as one of the most asked questions we have received, and you see throughout social media and the internet is “what is the best indicator for forex trading?”

Throughout this blog post we hope to provide some clarity to this question and hopefully give a little bit of useful guidance!

Key Indicators:

The most common indicators used are RSI, Stochastic, Volume, CCI, Fibonacci Retracement and MA. All of which are very useful tools in identifying trend direction, momentum, and potential trend reversals. However, the problem with the majority of these indicators is they are lagging indicators; they are showing you results after the trading opportunity has occurred, rather than in the moment so you can place a trading opportunity accordingly.

 It is always useful to understand how to implement indicators, because they can act as a guidance along with supportive confirmation. However, you need to remember there is no magic indicator they all have their negative points, and many can give false signals, causing poor entries or wrong opportunities taken.

In our opinion you just can not beat price action trading.

Price Action:

The key components of price action are as follows:

  • Upward trend – Higher highs + Higher lows
  • Downward trend – Lower Highs + Lower lows

One of the key points to remember when trading is:

 “NEVER TRADE AGAINST THE TREND”

Price action will encourage you to trade in accordance with the trend; for example, when a trade is in an upward trend and presents a higher high many people will watch there indicators and take a sell position; however when it performs a higher low and then continues upwards many people will end up losing on that trade as it could then hit the SL.

Price action traders will wait for the Higher Low to begin showing signs of consolidation and wait for it to show confirmation its going back up and take a buy position with a TP higher than the previous high and an SL around/ below the previous low point. Therefore, using price action to show clear signals of entry and exit and direction; rather than constantly watching an indicator.

Conclusion:

It is our opinion that trading indicators are useful tools; however, the data collected from data rests heavily on trader’s psychological behaviour; therefore, price action is a key representation in real time of the current behaviour of active traders within your chosen trading pair or stock.

Price action helps in building discipline within trading along with patience as you have to wait for price confirmation; this can lead to higher success within trading as it will take longer than an indicator confirmation meaning you can avoid a lot of volatility within the market. This is due to the fact you are entering a trade once price has begun reflecting what your prediction was.

Disclaimer:

It is important to remember that everything stated within this blog post is our opinion based of our own personal experience as well as the feedback given to us from our clients. Trading is all about finding what works best for you; so, we do recommend trying a variety of different indicators and strategies and finding what works best for you.

If you need any assistance with this, please contact our free helpline:

admin@makingfxsimple.com

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