MoneyMakingForex.com

Which Are The Proven Best Forex Indicators?

Volume?

Seeing as how forex doesn't have any accurate market-wide volume statistics, stay away from any indicator that uses volume. I know that sounds obvious. But many charting packages include volume (just from their clients' orders) and also include volume indicators.

They are worthless to you. Don't use them.

Really, It's Not the Indicator

You know, it's really not the indicator. It's the person using it. You can have the best indicator (or combination), but it doesn't matter if you don't use good money management. Or what if you don't even know how to read them? Then they are worthless. Remember, it's you.

The Real Test

The real test if an indicator is any good is whether or not it is robust. How do you determine if it's robust? Try it in different time frames. Try it in a different market. Does it work well in stocks? What about futures?

It doesn't have to work extremely well, but if it's a big loser in other time frames or in other markets, then dump it.

The Two Kings

There are many good indicators and different ways to use them. However, I'm going to give you my two favorites. You can use these to start making money immediately. There are; Bollinger Bands (the squeeze), and CCI (zero line reject).

The market moves in cycles--all kinds of cycles. One cycle that a lot of people miss is volatility. The market moves from more volatility to less. An easy way to see this is to put Bollinger bands on your chart. When they get tight together, there is less volatility. Soon the market will make a large move, moving back into the cycle of more volatility. Look for the price to break through one of the bands. See the picture for an example on a four hour chart of the EUR/USD cross.

When the CCI goes to or near the zero line on the CCI and then begins to move away (bouncing off of it), you enter a trade. See the picture.

Are Day Trading Indicators Different?

Some people always want to know what is the newest technical indicator on the market? You don't need special indicators to day trade. Sure day trading is the hardest of all kinds of trading. Follow the test above. Does the indicator (or combination of them) work on the time frame you've chosen? Does it work on other time frames and in other markets? If so, then it is good.

Don't over-complicate things. Simpler is better because you are less likely to make a mistake, and in day trading the tolerance for mistakes is almost zero.