Indicators are just tools to aid you. If you look at the experienced traders it won’t take much time to understand how they trade the market. Though you can easily find great trades do you really think indicators are the ultimate solution to this problem? The straight forward answer is no. Some of the rookie traders often overload their trading charts with too many indicators. They simply think this is the best way to make money without making things complex. But in reality, using too many indicators is one of the major reasons why retail traders lose their trading capital. However, if you can use them properly, you can expect to make a decent profit from this market. Let’s learn about the top 4 indicators
Simple Moving Average
Simple Moving Average in short SMA is the best way to find great trades. But if you do the math, it won’t take much time to develop a balanced trading strategy using the SMA. As a new trader, you should set the value of the period to 100 since it will help you to make a decent profit in this market. Being a currency trader, you need to think about many factors. Never think you can change your life unless you trade the market with proper discipline. Once you gain control over your emotions, use the 100 SMA to scalp the market. Most of the time the 100 day SMA acts as a dynamic support and resistance level. Though some traders prefer to execute pending orders, it’s always better to use the price action confirmation signal.
RSI is one of the most popular indicators used by experienced traders. But to use the RSI indicator, you must have access to a premium trading environment. Feel free to visit https://www.home.saxo/en-hk since you can learn a lot about the elite class broker. New traders often use the RSI indicator in the lower time frame. But lower time frame trading is extremely risky. Most of the time you will end up by executing trades against the major trend. So, it’s better to use the RSI indicator in the daily time frame. There are two basic levels of RSI reading. The level marked with 30 indicators is the oversold condition and the level marked with 70 indicators is the overbought condition. Just by using this simple principle you can easily make a profit in the long run.
Those who prefer to trade the longer time frame should definitely learn to use the parabolic SAR indicator. If you spot consecutive three dots below the candlestick you need to look for buying opportunity. Similarly, if you spot three consecutive dots above the candlestick, you need to look for a selling opportunity. Making consistent profit in this market is really easy when using the Parabolic SAR indicator. But make sure you use it in the higher time frame or else you will lose a big portion of your investment.
ADX is a powerful trend strength assessment indicator. In fact, most of the experienced traders in Hong Kong prefer to use the ADX indicator to filter out the trend reversal signal. If the +DI line cross below the –DI line you need to look for a selling opportunity. Similarly, if the +DI line crosses above the –DI line you need to look for a buying opportunity. Based on this simple principle you can easily make a profit and change your life within a short period of time. Some of you might use the ADX indicator in the lower time frame. However, do you really think this will help in the long run? The simple answer is no. You need to use it the higher time frame to filter out high-quality signals.
Learning to use the indicator in an effective way is a very challenging task. But if you use the demo account, it won’t take much time to master these skills. So work hard and try to learn its use properly to become a better trader.