FOREX

Three rules you must follow while using the indicators



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Indicators is a very common topic in the Forex market. Starting with the rookie traders and ending with the experts, everyone uses indicators to analyze the quality of the trade setup. The amateur often becomes biased with the use of indicators and they start using more than 5 indicators to analyze a single asset. But when you use too many variables to assess the quality of the trade setup, you are just making things complex. You might be trading based on the reading of the indicator. To make a consistent profit from this market, you must learn to use the indicator efficiently. For this reason, we will give you three important tips that you must follow while analyzing the market with the help of an indicator.

Never use more than 3 indicator

Excess of anything is really bad. If you use more than 3 indicators, you won’t have the chance to see the raw price movement. You will busy deciphering the readings of the indicator. Since the indicator gives leading or lagging signals, you won’t be able to deal with the real-time price feed. Without analyzing the real-time market dynamics it’s tough to improve your trade execution process. Most of the time, you are going to miss a big portion of the profit. But if you start using 2 indicators, you can keep things organized. Most importantly, you can focus on the raw price movement to find critical support and resistance level.

So, using more than 3 indicators is a very big mistake. Stop dealing with too many helping tools as it will make the trading process much more complex. Develop a trading strategy based on the support and resistance level. Once you find the signals, use the indicator readings to filter out the false trade setups.

Daily and weekly time frame analysis

If you use an indicator based trading strategy, you must search for the best Forex broker Australia. Without using an advanced trading platform, it will be tough to deal with the dynamic losses at trading. After securing a good broker, you have to learn the use of indicators in the demo environment. But rely on the daily and weekly time frame data. Choosing the lower time frame greatly increases the risk and makes you vulnerable. If you want to make a decent profit, make sure you are not taking high risk in any trade.  Based on the weekly and daily time frame analysis, you should place the trade with low risk. However, if the indicator suggests the trade setup is extremely precise, you can risk up to 3% of your account balance

While analyzing the daily and weekly time frames, you might get bored. But dealing with such data is a very simple process. Think about the long term profit factors and control your emotions and greed in trading.

Be a disciplined trader

The active users of the indicator should never break the rules or discipline. Breaking rules at trading is one of the key factors for which the naïve traders are losing money. You won’t be able to deal with the losing trades unless you can focus on your trading strategy. So, stop giving priority too much on the reading of the indicator. Give priority on your discipline so that you don’t have to blow up the trading account due to some aggressive approach. Follow the safe path and try to win more trades. Stick to the traditional method of risk management policy and use a professional broker.

The indicator-based traders often try to trade the major reversal. Unless you are skilled at analyzing the higher time frame, you should try to trade in favor of the trend only. Without doing so, you will be risking a great portion of your capital. Be a safe player if you really wish to become a profitable trader in the Forex market.