FX Indicators - 3 Steps to Setting Up an Easy Trading System

Just imagine if you had FX indicators that would help you to consistently pick winning trades. There are a couple of indicators that I have used that work very well. You need to use them in a specific way to make it work.

FX indicators are tools traders use to help them determine where price for a currency pair is heading. Using a few of them together can help pin point what's about to happen with price movement. The idea is to have a number of them line up showing that price is about to move up or down.

It can be very confusing when you first start to learn about Forex trading. There are so many different types of tools you can use that it's hard to know what you should be using. Some people get turned off from trading as it seems like there's no clear path to follow to create a simple trading system that you can rely on.

Determine the Trend First

It's important to determine which direction the currency pair is trending before you enter any trades. You do this by looking at the daily, hourly, and 15 minute charts. You want to find currency pairs that have all three charts showing the trend in the same direction. Your trades will be more consistent if you trade with the trend rather than against it.

Moving Average Indicator

MA is one of the easiest ones to use but is very helpful. Pretty much every charting package will have this as a feature you can turn on. It is a line drawn over your charts that smooths out the highs and lows.

This line makes it very easy to see how a currency pair is trending. The key points to watch are when price breaks above or below the line. If it breaks above, it's a signal to go long. If it breaks below, it's a signal to go short. Remember though, you need more than just these line breaks to enter a trade.

Stochastic Indicator

This is used to read price momentum. It measures overbought and oversold conditions. When price becomes too overbought or too oversold, it tends to reverse. This is represented by an oscillating line that's placed under your charts. This line moves between zero and one hundred. The currency pair becomes more oversold closer to zero and more overbought when it's closer to 100.

The idea here is to use both of these FX indicators together. When you see stochastics oversold and price breaks up and through the moving average line, you should go long. If you see stochastics overbought and price is breaking down and through the moving average line, you should go short.

So there you have it. A simple way to use FX indicators that will help you pin point how to enter a trade. I now use an ever better way to trade the FX market. I use software that does this type of analysis for me. It's far more consistent than doing it manually.