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
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
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
Be a disciplined
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.