Technical indicators are the helping tools for retail traders. Amateurs always use these tools in the wrong way. For instance, they use too many technical indicators in their trading platform with the hope to find the best signals. But by doing so, they make things a mess. You should learn to keep things organized in the trading platform. The pro price action traders in the Singaporean trading community always focus on a simple approach. They never use complicated indicators to find the trade signals. Indicators are meant to analyze the quality of the trade setups. So, if you use them to find the trade setup, you are bound to lose trades.
There are many types of indicators in the Forex market. Instead of dealing with hundreds of indicators, you should learn the top three indicators used by professional traders.
RSI
RSI is also known as the relative strength index indicator. It draws a simple curve in the indicator window, which shows the state of the market. For instance, if the signal curve in the RSI indicator trades below 30 marks, it is a sign the bears are getting exhausted. So, you should be looking for bullish price action signals. On the other hand, when the signal curve trades above 70 marks, it means the buyers are getting exhausted. In such a case you should be getting ready to short the pair. Though it’s a powerful tool, you should use it to analyze the quality of the trade signals. Never forget to use this indicator in the daily time frame or else, it can give you faulty reading.
Moving average
The moving average is a very common tool used by all levels of traders. But to use the best moving average, you should learn about the professional trading platform here. Without having a professional trading platform, it’s really hard to find the best possible trades. The traders lose money since they use the moving average in the wrong way. For instance, they don’t know the perfect settings of the different kinds of the moving average. As a new investor, you can rely on the 100 and 200 days moving average as it gives critical information about the market. Most of the time, the moving average acts like dynamic support and resistance. So, any rejection of the candlestick pattern is an excellent opportunity to execute the trades.
ADX
ADX is a very popular trend identifier tool. There are two prominent curves in the ADX indicator. If the + DI curve trades above the – DI curve, it means the market is in the uptrend. When the + DI curve trades below the –DI curve it means the market is a downtrend. Based on the direction of the trend, you can execute the trade with a high level of accuracy. But there is a small issue when the traders rely on the ADX tool. You should never trust the reading of the ADX tool while trading the major news. News trading is very risky and the high impact news can change the trend without any strong signals.
Useful tips
When you use the indicators, you should not think that you will never lose money. You might use a million-dollar trading strategy, still, you will lose money at trading. To protect your capital, you have to learn the risk management strategy. Though you may say you never risk more than 2%, you still can blow up the account. Develop a unique trading strategy by which you never lose more than 2% in a single day. Try to find the key reason for losing the trades in the Forex market. If you can stick to your trading method and keep on improving, it will take less than a year to master this business. Never forget to keep patience while placing any trades.
