Power of Forex Indicators
Forex indicators used with the technique described below will add to a traders confidence and remove the “should I” or “should I not” traders emotion to a varying degree. This technique, when applied to my existing methods shown on this site, does to an extent, acts as a warning system before entering a trade. This “safety net” as I call it, can and should be applied to all my trading methods and techniques shown on this site. This one simple setup when traded with discipline will add to the probability of your trades; it should define when to "get in" and when to "stay out!" Applied correctly and to the letter, makes this technique a powerful trading method! So how does it work…? (see video below) To start off with, the only difference in this setup in comparison to my regular setups are the following two indicators, the “RSI” and “Stochastic” …I can almost hear some traders shouting yeah, yeah we know these technical indicators – they are nothing new! Yes, I agree – you may know them and may have even used them… but not like how I do. I use them uniquely as Forex indicators and blend them with my methods of trading!
The moving averages that are used here are the 20 and 50 moving averages (simple), in place of the usual three. The technique as demonstrated in the chart on the left, always works best when an overbought or oversold indication is first observed on the chart (by blue ball), this must be followed by a Parabolic SAR indication (green dots)…please note that this must be the first SAR indication. Now comes the important bit, when the first SAR indication shows, the RSI must have crossed into the correct territory of its 50 dividing line (yellow ball). In other words the position of the RSI must synchronise with the first SAR indication It is equally important that the candle that activated the SAR signal must close above the 50 moving average if going “long”, or close below if going “short”. The stochastic lines should be spacing out or separating at this stage (though not important) Do not take the trade if any of the above do not confirm! Take note that, if a time frame lower than 60 minutes is being traded, then the RSI will at times confirm the SAR indication much later than the first one. Here I have demonstrated how effectively one indicator can be used to confirm the other (RSI, SAR and Bollinger) and they must confirm!! Normally my preferred method is the three moving average approach, here however, I have used the 20 and 50ma’s just to demonstrate and alleviate some traders beliefs, that think moving average settings are cast in stone, (too many emails on this one)…if whatever settings you choose work for you, then that should be good enough. This technique should compensate for most moving average irregularities – in other words we are happy with just trend indication from the higher moving average. The Systematic approach to trading this one is as follows…
Power of Forex Indicators Video
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I trade this method with the 60 minute Forex charts, and taking all else into account, it very rarely fails me.