Forex Trading Style: 7 Essential Indicators You Need
When developing your own forex trading style, there is a danger in becoming fascinated with indicators.
The newer trader experiments with one, finds it doesn’t work so well, then switches to another, then another, etc.
The list below highlights 7 key indicators that can be woven into your forex trading style. You may not need to go any further than this. Stick with the 7, practice them, get to know them inside out, and get the satisfaction of developing your own successful forex trading style.
Indicator
1
Candlesticks –watch for a hammer, doji, head and shoulders
pattern, 1-2-3 formation, double top or bottom.
Indicator
2
Trendlines –draw common sense trendlines across the highs
in a downtrend or lows in an uptrend. Watch for price to break the trendline
and come back and test it.
Indicator
3
MACD –Watch for a difference between the highs and lows of
MACD and price. When there is divergence watch closely for a good entry
point once price has shifted in the direction of the divergence.
Indicator
4
200 EMA –this indicator is an all time favorite for traders
across the board. On higher time frames (1 hour, 4 hour, daily) take
note whether price is above or below the 200 EMA to give you the sense
of price direction.
Indicator
5
Pivot points –take note of previous support and resistance
lines as price will come back to retest these levels time and time again.
Indicator
6
Fibonacci –learn how to use this tool well and take particular
note of the 50 and 62 retracement levels, especially when they coincide
with trendlines or previous support/resistance.
Indicator
7
Price itself –let price prove to you where it wants to go
by setting entry orders rather than market orders when entering a trade.
By setting an entry order, price has to reach the target you specify
before pulling you into the trade.
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