Many traders use numerous indicators - but over the last 22 years I have four favourites and I will share with you here and they have worked for me and they will work for you. Let's look at them...
Today, good old bar charts have gone out of fashion but I think their essential and use them in conjunction with the indicators below. I don't use candlestick charts, there is a big myth there better but there not. If you like using them, then do so but the relationship between the daily range open and close is obvious.
Here are the four indicators and you can read more about them in our other articles. There available on most free chart services and will take you around 30 minutes each to learn and then, your all set to start using them on your forex chart and start making bigger profits.
1. The Stochastic
For me this is the ultimate timing tool.
Trading stochastic crossovers with bullish or bearish divergence, into chart resistance or support, from overbought or oversold levels, is simply the best market timing tool. If the stochastic crosses from chart highs or lows the signal is even more powerful.
2. Relative Strength Index
This gives you the strength of the trend and when RSI weakens or strengthens, when the trend is still up or down, especially from over bought or oversold levels, you have advance warning of a contrary move.
When combined with the stochastic, you have a great combo for better market timing.
3. The Bollinger Band
Gives you the volatility of price and you simply need to understand it to make money at forex trading.
I love using pops to the outer band, near chart support and resistance, to look to take profit or, initiate a contrary trend. Also in a strong trending market, dips back to the centre band ( the moving average) are great value areas to look to add extra positions in a strong existing trend.
You don't time with them - you look for areas in line with support and resistance to trade into.
4. Moving Averages
Simple moving averages are great and I have just mentioned the mid band of the Bollinger band, which is in fact a simple moving average, to buy and sell back to in existing trends.
In strong trends dips to the 18 - 25 day moving average are a great place to load in new trades.
Another excellent time period is the 40 day moving average which acts as the last line in a strong trend with nearby support or resistance. In strong trending moves we like to trail our stop behind this level and it keeps us in the long term trends.
When trading with the above and support and resistance lines you will get market timing for your trading signals.
There are some other useful technical indicators and we like the ADX line and the MACD too - but the above are the four we use all the time. If you spend 30 minutes on each one you will soon have four powerful indicators that you can use in your own forex trading strategy, to seek currency trading success with.
Check them out, they're simple, powerful and can work for you too with a little practice.
