Trading Indicators

From the large number of emails we get at The Dynamic Trader asking us which indicators we use and what are the best ones is one of the most common questions. Most new traders are always in search of the holy grail and especially of the one indicator that is always right that tells you when to buy and sell making you lots of money with very little or no work at all. The truth is no indicator like that exists!

The most common trading indicators are Moving Averages, RSI, MACD and Stochastics. These are the ones you will commonly see on most traders charts and on ours too. A common misconception is that the more indicators displayed on a chart the better the analysis will be. Filling the chart area with numerous indicators is only going to lead to paralysis of analysis.

Keep your chart space fairly simply and clear and don't get tied down with what the indicators are saying all the time. Indicators are meant for confirmation only and relying on them heavily will not provide accuracy in your trading. Price is the most important aspect of trading and leads the indicators.

Some typical settings traders use for the common indicators are listed below.

Moving Average - 50 or 100 or 200 EMA or SMA
RSI - 14
MACD - 12,26,9
Stochastics - 8,3,3 or 14,3,3

Again, please use indicators to confirm what you already gleaned from the charts. Concentrating on indicators and then price is a very blinkered form of trading.

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Good forex trading...

Forex Analyst
Javid Shaik