Since the danw of the web ther has been great opportunity for want to be forex traders. It has become very easy to set yourself up as an independent trader, trading from your home via technical indicators from a charting platform such as Metatrader or Ninjatrader.
Now ten years later the trader has to face the problem of information overload. Which forex indicator should he use? Which markets does he want to identify; trend or range bound? With thousands of indicators online it becomes a difficult choice to make.
I think the key to choosing your forex indicator is to keep it as simple as possible. Don’t over complicate your trading.
You will possibly need two indicators; one to identify the trend and one to trigger you into a trade. They can be one of the same albeit set to different lengths or periods. What you want to avoid are indicators which have many lines, indicators which are too fast or too slow and most importantly, indicators which repaint.
I tend to like paint bar indicators. They paint the bar or candle a certain color when they are in a buy signal and a different color when they are in a sell signal. Things like Heiken Ashi MA indicators, TTM trend, or nonlagdots are all great indicators. Then you have momentum indicators like BBsqueeze, ultra trend and fisher transform. These are great trending indicators which you can use to decide which direction you will trade in.
If you want to use a indicator to create your stop in your forex trading system then I would suggest something like metatrader’s Supertrend indicator. It really is one of the better stop indicators around.
Once you have decided which indicators will go into your trading system then you just have to stick to your trading plan what ever that may be. Such things like; trading only in direction of your trend indicator will help keep you on the rights side of the market, trading with a stop (will help protect your trading capital); not entering on forex data releases will all go towards forming strong foundations for a great trading system.
Then it all comes down to testing, backwards and forwards, of your trading system and making small changes to your settings. If you need to make changes then I would suggest that accept that that trading idea/concept didn’t work and move on and try something else.