RSI is the Best Trading Indicator For Beginning and Advanced Forex Traders

Have you ever wondered what trading indicator you could always use regardless of your skill level? RSI, the Relative Strength Index, is such an indicator. It is an indicator that can be used as a standalone trading system without the need for any other method.

Helpful for the beginner

If you are new to trading Forex, simplicity is important. The RSI indicator can help you understand what is happening on your charts with a minimum of learning. Most Forex educational formats teach you about every tool in the toolbox when you don't need all of the tools in the toolbox to trade Forex.

The problem with Forex education

Suppose you went to college to get a degree in a particular kind of mathematics. While you were in school however you had to take classes in every aspect of mathematics so that when you were done you still didn't really know that much about the area of mathematics you were interested in. For the most part Forex educational systems teach you about everything in a "vanilla" sort of way so that when you are done you look around - after spending $5,000 - and are still wondering how to trade Forex.

The RSI has 4 signals to learn

Suppose you could learn 4 different signals on one chart. Suppose that when you looked at a trading chart regardless of currency pair or time frame,that with a few calculations you knew more about what was going on on that chart then most professionals. RSI allows the trader to get an immediate picture of what is happening on a trading chart in a matter of minutes.

Manually or automatically

RSI has been around since 1978 and is still used extensively to determine whether prices on a trading chart are overbought or oversold. This is NOT the correct use of RSI. It does not determine whether prices are overbought or oversold. However this is what most books and educational formats will tell Forex traders. The 4 signals of RSI are positive and negative divergence and positive and negative reversals. All 4 of these signals can be plotted manually using the drawing tools on a chart or they can be implemented automatically using an indicator called The RSI Paint Indicator.

Why these signals are so important

In the 9 1/2 years - 2000 to June 2010 - there were over 9200 of these signals on RSI hourly charts. You can imagine how many more there were on 15 minute charts. On hourly charts over that period, reversal signals averaged over 70 pips per trade. If 25% of those trades were one kind of reversal that would mean roughly a total of 17,000 pips per year or 71 pips averaged per trading day on hourly charts.

Nothing else is needed

RSI does not need trend lines to tell the trader when to trade. It doesn't need Fibonacci, or Gann or Elliott Wave. RSI is a standalone trading indicator that measures momentum in the market and uses the 4 signals above to tell the trader when to trade.

If you are just starting out in Forex or you have been trading unsuccessfully you should consider the small investment in learning RSI a step in the right direction. You can learn more about RSI by reading the eBook, RSI Fundamentals, Beginning to Advanced.

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Forex Trading - The Best Forex Indicator

I don't believe in fancy indicators or indicators on other convoluted indicators. This is all made too complicated by forex traders.

At the same time, I think a lot of traders try to under simplify too reaction to all the over complication. I've heard of traders that don't use any indicators and just stare at price and take trades. Believe me, there are some who have the experience to do that. 99.99% chance that you're not one of them.

You do need a guide when staring at the hard right edge of the chart. I wish I could just tell you to use a simple moving average and just move on. Ha! That doesn't quite work. You need something a little more advanced than that.

However, the ultimate indicator does use moving averages. I'm talking about the MACD. I'm sure you know it. It charts at the bottom of your charts as a histogram. What it's telling you is the difference between two different moving averages. In other words if you were to chart a 5 period MA and a 15 period MA, then you would notice that at times the two lines are getting closer together. That's when the histogram would show just little spikes. Other times the MAs are moving further apart. When this happens, the MACD shows bigger spikes. So you can track the difference between two moving averages with this MACD.

Now, how the heck is that useful? It's useful because when a move in the market is running out of momentum, the longer moving average will catch up to the shorter moving average, even if the price is making new highs. When that happens, you get a divergence. The price just made a higher high, but the MACD made a lower high.

This doesn't mean the price will change direction every time, but it does mean that there is a better than 50% chance that the price will change direction. You can place your stop (mental stopless) at the top of the high and wait for a break downwards, enter on the down break and hold it for at least the size of your stop. Then get ready to exit on the sign of a turn around.

This is the simplest, best, easiest trade I am aware of. Most traders discount the power of MACD divergence. You don't have to be one of them.

Oh, I forgot to give you my best MACD settings. I use 5-15-1. Of course, you are free to use whatever you'd like, but that has worked the best for me.

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What is the Best Swing Trading Indicator?

Swing traders could not ask for much more than an indicator that could offer the chance of knowing in advance when the market they were trading was at its breaking point. If you could know in advance when a market was ready to turn, this would greatly increase your chances as a trader of entering into a profitable trade. Luckily, such indicators already exist and when used properly they offer to give you an enormous edge while trading. These indicators are known as momentum indicators.

While many indicators are lagging, momentum indicators are leading. Put simply, they offer a glimpse at future price movement before it has occurred. Momentum indicators work on the basis of measuring a currency pair's level of momentum. As a currency pair begins to slow down and lose speed or momentum, the indicators warn of this and alert traders that a possible retracement in future price movement may be about to happen. By plotting a currency pair's momentum, a trader can know in advance when markets may be preparing to pull back.

One such momentum indicator is called the RSI. The RSI (relative strength indicator) shows levels of a currency pair that are considered overbought or oversold. When the indicator is in these areas, a trader should be on the lookout for potential price retracement. When a currency pair goes into overbought or oversold, there is a fairly good chance that it will retrace in order to adjust to the new price levels before it continues. By knowing in advance when this may happen, traders can close trades out early and lock in profits before they are wiped away and lost forever in the retracement.

If you want to know future price movement in advance, then take a look at momentum indicators, especially the RSI, today. The RSI is one of the oldest and most trusted trading indicators available. This may just be the trading indicator that you are looking for to give you an edge in your swing trading.

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Forex Charts - Using The ADX Indicator For Bigger Profits

If you're using charts, then you want to trade the strong trends - and the Average Directional Movement Index Indicator, or ADX, enables you to do this.

Wells Wilder developed the ADX, and outlined it in his classic book "New Concepts in Technical Trading Systems".

Let's look at this essential indicator in more detail - and see how to apply it on your forex charts, to give you greater accuracy when generating your trading signals.

Determining the Strength of the Trend

The ADX is a momentum indicator, which aims to measure the strength of the trend - and attempts to determine if the market is trending, or is trading sideways.

The Advantages of the ADX

A core belief of technical analysis is that a strong trend in motion is more likely to continue, than reverse. Therefore, you always want to be trading strong trends - as your odds of success are higher. The Average Directional Movement is a good indictor - and you should consider using it as part of your currency trading system.

The Technical Bit

For the boffin's out there, here's the technical bit - don't worry if you don't understand the calculation, its easy to use when visually plotted. The ADX is based on the comparison of two other directional indicators, both of which were also developed by Wilder, and they are:

Positive Directional Indicator (+DI) and the Negative Directional Indicator (-DI) to produce ADX as showed in the following formula:

ADX = SUM[(+DI-(-DI))/(+DI+(-DI)), N]/N

Where:

N: Refers to the period of calculation. The formula above produces the ADX line, which oscillates between 0 to 100 values. The +DI and -DI are both present and can be seen to make up the indicator.

You don't need to understand the above calculation to use the indicator - you only need to accept that the indicator works.

The indicator is easy to use when it's visually plotted - and you'll find it included, with most of the good forex chart services.

How to Trade using the ADX Indicator

The ADX it's not a bullish, bearish trading signal generator - and should never be used as such.

The ADX indicator simply indicates the strength of the trend - and other indicators should be used to enter, and exit trades.

Although the ADX fluctuates from 0 to 100, it rarely moves above 60.

Use the ADX in the following way:

Readings above 40 indicate the strength of the trend.

Readings below 20 indicate range trading and flat periods of consolidation.

You can use the crossing of +DI and -DI to determine the trend direction; when +DI crosses -DI upward, it's a bullish signal, on the other hand, when +DI crosses -DI downward it's a bearish signal.

The ADX line is a great momentum indicator and like the RSI (also developed by Wells Wilder), the ADX it will help you trade the strongest trends - and give you advance warning of changes in momentum.

The Bottom Line

If you want currency trading success, you can't just trade support and resistance levels, and hope they hold or break. You need confirmation of momentum to get the odds on your side - and the ADX indicator will assist you.

Final Words

New Concepts in Technical Trading Systems was published in 1978, and was one of the first trading books I ever bought. Every trader should make this book a part of his or her forex education. If you want to learn forex trading the right way, get the book, and use the ADX indicator to increase your chances of making big FX Profits.

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Trend Lines Are Still a Great Technical Indicator For Forex Trading

When you are forex trading you really need to take advantage of anything you can. A slight edge can mean the difference between thousands literally. That is where this article comes in. We are going to look at how drawing trend lines can give the forex trader an advantage.

Just a basic reminder about technical analysis, technical indicators make different mathematical calculations and display the results on a price chart. The skilled forex trader interprets these technical indicators and makes trading decisions.

The most basic technical indicator is is one that you can draw with your own hand, it is referred to as a trend lines.

To draw trend lines simply:

1. Print out an historical price chart for a given time interval of a currency pair.

2. draw a line connecting two or more parts of a graph that have higher lows, or lower highs.

Poof, now you have trend lines. The trend line represents the basic price direction of the currency pair. When the price of the currency pair breaks through the trend lines in the direction opposite of the trend, you would expect a reversal.

By reversal I mean this:

1. If the prior trend was upward and the price broke through the trend lines moving down, this would indicate a new downward trend using the trend lines method.

2. If the prior trend was downward and the price broke through the trend lines moving up, this would indicate a new upward trend using the trend lines method.

Trend lines can act as either floors or ceiling for price data. When these lines are penetrated, the price usually moves completely to the other side of the trend line.

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The Best Indicator For Forex Trading

In the field of forex trading, you will encounter hundreds of different forex indicators and it will be very hard for you to know which one is the best indicator for forex. In fact, the choice of the best forex indicator is very subjective and it depends on each individual trader.

However in this article, I will be sharing with you a forex indicator that I feel is the best for me and I hope that it can be of help to you in your trading.

The Moving Average Convergence Divergence (MACD) is my personal choice for the best indicator in forex trading and it is because it has several features that are built within it. You can use the MACD to tell the trend of the currency pair you are trading as well as identify the possible reversal of the market after it has been trending for some time.

What I love about it is its ability to confirm a trend line break or any breakouts. The problem most traders face in trading is the occurrence of fake outs and this problem can be minimize with the help of the MACD.

Depending on your trading style, you can adjust your MACD to make it more sensitive or less sensitive. Making it more sensitive will give you more trading opportunity but at the same time more false alarms. Therefore it all boils down to your trading style and habits.

The above is what I feel the best indicator for forex trading but it will be very risky for you to trade with only one indicator. I usually trade the MACD with other 2 indicators to give me better entry and exit. I hope that you will also benefit from MACD as much as I do and wish you all the best to your trading.

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What Are the Top Ten MetaTrader Indicator Options and How Are They Used?

If you're reading this article, then you're probably already using one or more MetaTrader indicators to augment your trading with the MetaTrader 4 or 5 terminal. Indicators have been used by technical forex traders for years to generate buy or sell signals according to specific conditions and situations that arise in the markets. The top ten most popular MetaTrader indicators for the forex market are the:

1. Relative Strength Index or RSI - this indicator is self-explanatory. It measures a currency pair's strength by comparing current prices to past prices. The indicator flags when the currency pair is overbought, going over 70, and when it's oversold, going below 30.

2. Moving Average Convergence Divergence indicator or MACD - this indicator is used by traders to confirm market trends. MACD differs from a normal moving average in that it incorporates the convergence/divergence aspect and generates buy and sell signals when there is a crossover. The indicator is also effective in signaling key trend reversals.

3. Stochastic Oscillator - this is a momentum indicator that compares the current currency rate with the historical price. It indicates an overbought condition when it exceeds 80 and an oversold condition when it drops below 20.

4. Bollinger Bands - this indicator makes use of simple or exponential moving averages to determine relative price levels and volatility that are then used to generate trading signals.

5. On Balance Volume or OBV - this volume indicator is very useful in generating a trading signal based on positive or negative volume that is determined by the previously traded forex rate.

6. Accumulation/ Distribution or A/D indicator - a momentum indicator that gauges supply and demand by discerning whether the currency is under accumulation or distribution.

7. Money Flow Index or MFI - a momentum indicator similar to the Relative Strength index, however the MFI is volume-weighted and calculated using a 14 day period. By taking volume into account the index determines positive versus negative money flow and is measured on a 0 to 100 scale.

8. Average True Range or ATR - a volatility indicator that is determined by a 14-day moving average and three values: high-low, high-close and low-close. Like most volatility indicators, ATR calculates the activity level of a currency pair and cannot predict a directional change.

9. Average Directional Index or ADX - this indicator is used to determine the strength of a trend, and it is based on oscillators that range from 0 to 100. The ADX number rarely goes over 60, with 40+ indicating a strong trend and under 20 reflecting a weak trend.

10. Williams Percent Range or %R - a momentum indicator used to determine oversold or overbought conditions in a non-trending market. It is read like a Stochastic Oscillator except that it is drawn upside-down. Readings of 0 to -20 indicate an overbought condition while -80 to -100 indicate an oversold condition.

All of the above indicators are included in the stock MetaTrader indicator list which also includes 20 more indicators you can incorporate into your custom expert advisor. Technical indicators such as these can be instrumental in generating optimum buy and sell signals in an automated trading plan and should be studied carefully before incorporating them into your overall trading strategy.

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How To Trade Effectively With Average True Range Indicator - A Forex Stop Loss Indicator

Welles J. Wilder a popular technical analysis has invented the Average True Range (ATR) indicator and several other trading indicators like parabolic SAR and RSI (Relative Strength index) indicator. Average true indicator is a famous indicator since it doesn't generate any objective Forex trading signals. ATR presents you the volatility of market without generating trading signals. It depicts the average volatility in last fourteen bars of candles. The techniques for using Average Truth indicator for successful Forex trading are as below.

To Calculate Stop Loss

One of the great benefits of ATR indicator is calculating stop losses. If you want to design a Forex trading system either manual or automatic, you must design it in such a way that it is universal and can return profits in different currency pairs. For designing a system profitable in different pairs, it should fit according to various Forex pair volatility. You can use the ATR for adapting the system to the different currency pairs and hence work without need for manual intervention for various pairs.

For instance, instead of fixing of the stop less with constant value as 20 pips you can set it in terms of ATR like 120% ATR so that stop less will be 1.5 times the time of Average truth indicator. By implementing such settings, you system will be more adaptive and suitable for different currency pairs without requirement of optimization.

To find out the strength of a trend

As a rule of thumb, if the value of average truth indicator is low, then it indicates a week trend. And when the ATR reads high value, then it indicates a strong trend and candle range increases with gaining momentum of price. It can be helpful to measure the trend strength before you enter into trading. If the ATR value is decreasing, it indicates the current trend is losing strength and it is risky to enter trade.

To identify reversals

Another great advantage of ATR is its use in identifying the tops and bottoms of market trends. The concept behind this method is the concept that when Average true Range indicator is at minimum value, it identifies that the price will be at reversal point. The traders must concentrate on ATR value, and should be cautious about price reversals if ATR hits the bottom.

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What is a Good FOREX Buy and Sell Indicator?

A good FOREX buy and sell indicator would be able to tell the correct signals when the correct time to buy or sell a particular currency would be in order. Thanks to a lot of technologies nowadays, these have now been made possible at the control of anyone who purchases a FOREX autopilot system. These are FOREX trading software applications that allow an individual to trade in the foreign exchange market in the comforts of their own homes.

A nice feature of these autopilots is that since they are programmed to detect the signals the instant they are made, these robots can take appropriate actions without the need for human intervention. In most cases, this is, by any means, faster than a human trader would be able to react and place a call to make a trade, thereby giving you an unparalleled advantage.

Another advantage this has is that it contains various programs of all trading indicators, which it assesses against collected data it picks up, analyzes from that trend, and then takes the appropriate measures to get you the best possible deal. This is where it excels over human emotion and uncertainty when making a trade, which sometimes is the cause of lost opportunity and the difference between making a profit and losing it.

In many instances, it is the fear of making the appropriate decision that tends to make a difference in successful trading. Multitasking is also a strong point of the FOREX robot. This is because it can do all the mathematical computations relevant to the data at hand, and it will always know the best time when to buy and sell even without human intervention. This gives you the opportunity to enjoy time with the family and delve into your other pursuits in life.

These FOREX robots already come prepared in their packages, and all you need to do is install them on a computer and make sure they are connected to the Internet. They show all the lists of indicators and the currency pairs you will be trading against in the software. After picking one, you need not make any adjustments to the program itself unless you want to make fine tunings yourself. Having a FOREX autopilot system installed in your home is the best choice you could ever make if you want to do trading with currencies. Since these robots also have the best FOREX buy and sell indicator systems equipped in their package, you have all the assurance of having the best tools for the job available to you.

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What's the Best Forex Indicator? Your Own Eyes

Have you been on a forex forum lately?  If you have, then I am sure you probably have seen the endless amount of threads dedicated to the subject of indicators.  They'll talk about the new indicators, generic indicators, (moving averages, stochastics,etc..)  proprietary indicators, expensive indicators, etc....  They all want to know which is the best one?  I have a different question.  My question is does anybody talk about trading> anymore?

Think about why all these traders are seemingly infatuated with forex indicators.  It's because it does all the work for them.  It allows a trader to trade basically on autopilot (for a lack of better word). It allows a trader to just slap on a couple of formulas on a chart (which are lagging by the way) and all of a sudden they don't have to think about the market, because their indicators will tell them exactly when to buy or sell. Oh.....isn't that just fine and dandy.

Let me ask you a question. If the forex market can be traded so mechanically like this, why couldn't a child trade it? After all, the only thing they have to do is wait for their indicators to align.

Real trading requires both discretion and analysis from a trader.  The real way to look at a chart isn't when it's filled with indicators, its when it's completely bare. Looking at a simple bar chart will provide all the information you will need from a technical standpoint. All you have to do is open your eyes and pay attention.

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Exponential Moving Average - EMA Indicator

The exponential moving average is simply a line that is based on the average of a number of period points. Extra weight is given to the first few points, unlike the simple moving average. The SMA on the other hand has identical weighting on all points.

What is the purpose for adding weight? A quantity of traders feel that SMA's do not react speedily enough to drastic market movements. To correct this problem, the EMA's were created.

If you were to enter a 20 SMA alongside a 20 EMA, the exponential moving average will always respond to price movement quicker than the SMA would. There is a disadvantage to this. Because it responds quickly, many false changes in the trend occur.

In a ranging market, this can be very lethal. In a ranging market, virtually all Forex traders pass up the use of any indicator based on the moving averages.

A strategy that is reasonably popular with traders is the EMA crossover. A period of 5 as well as 13 EMA is typically used. The 5 EMA is the lead line, traders buy or sell if it goes above or underneath the 13 line. When the markets are in a solid trend, this strategy does fairly well. In a ranging market, heavy losses will take place.

An additional strategy involves three EMA and utilizes the cross over theory as well. Forex traders pick the EMA of 4, 9 in addition to 18. All three periods depict the short term, long term and mid term trends of a financial instrument.

If both the 9 and 4 exponential moving average lines cross over the 18 EMA, traders buy. In reverse, should both 4 and 9 cross below 18, that is an indication to sell the financial instrument.

While the Ema indicator can be very effective, it takes a skilled hand to truly reap the benefits this indicator offers to traders. While this article has been categorized under currency trading, the exponential moving average can be applied to all financial markets that include commodities and stock trading.

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Forex Buy and Sell Indicator

While there are a few free buy and sell indicators out there, you must ask yourself how accurate are they? Of course there are e few paid options out there that are certainly considering if you are serious about changing your lifestyle. One such indicator system is the forex autopilot system. This is a unique system where a trading 'robot' that actually automates the whole process for you, thus taking out all the guess work for you. As long as you have a computer the forex robot will do the rest for you.

This buy and sell indicator system works by you setting the parameters that you want to to trade with, the robot then scans the market actively seeking trends and tells you when to buy and sell, the amount of risk from your end is minimal as you set how much you want to trade with. With the forex autopilot system you have access to a demo account that has a free forex buy and sell indicator built in, so you can see how the system all works without you having to risk any start up capital.

If you are skeptical of this system, and you are thinking are there other options out there for me? well you could attend a seminar or buy books on the subject and this is fine if you want to learn everything there is is to know about forex trading. The only problem is that learning about how forex is that not easy and take a long time to learn. The forex autopilot system can get you up and running quickly and if you are someone like me who likes have a system that runs on autopilot then have a look here [http://www.squidoo.com/forexautopilotsystemreview] to see how it all works.

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The Metatrader and Metatrader Indicator - The Best Trading Platform in the Forex Market

Today, there are already hundreds of trading platforms to choose from. However, many still prefer to use the Metatrader 4 along with its Metatrader indicator since it is considered as convenient, user-friendly and best of all, effective. One of the main reasons why it stands out among its competitions is because it can simultaneously work with more than 10,000, all having several accounts. This forex Metatrading program has a server that has the potential to process hundreds of financial instruments. It can even store quotes history that were dated couple of years ago.

But other than that, the forex Metatrading program and its Metatrader indicator is not just a high quality platform. It also shows the capacity of the IT industry especially with the new developments made at the trading software. Its mobile trading allows clients to conveniently trade and earn profit from the market. The security system is robust to prevent other people from accessing the trader's account. These and more are the things that make it a very competitive forex Metatrading program. With all the demands that the trading market has, the Metatrader indicator is definitely the perfect solution for all the traders out there.

If you are still hesitant to try this for your trading needs, remember that you can no longer find a trading platform that is as user-friendly as the Metatrader. There is a wide array of powerful features that can best suit all kinds of traders, whether you are novice or a pro. You can efficiently manage all your databases, groups, data feeders, financial instruments, and the like if you would use the Metatrader as your assisting software. And best of all, you can also successfully create a network which can entice potential partners without sacrificing the accuracy and the reliability at the same time.

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Stochastic Forex Indicator

The stochastic Forex oscillator tool is a popular indicator employed by all kinds of traders in their Forex trading analysis. Momentum is the most important employ of this indicator. Traders in general make use of three types of stochastic indicators. They are made up of the slow stochastic, fast stochastic plus the full stochastic tool.

They operate very similarly. However, the most common kind utilized is the slow stochastic indicator. Stochastic indicators are based on the theory that prices normally close in the higher trading ranges when in an uptrend.

The reverse is also assumed where prices will close in the lower trading ranges in a down trending financial market. Momentum remains strong when this happens. There are two main indicator lines in the stochastic tool. These two lines are the %D in addition to the %K lines.

This is another oscillating banded indicator just like the RSI Forex indicator. A range of 0 to 100 is where the two %k in addition to %D lines range. The 80 in addition to the 20 line signify extreme trading ranges.

As mentioned earlier, this tool can also be utilized to spot oversold plus overbought conditions. Making it similar to the RSI indicator yet again. Should the indicator breach the 80 line, this is a sign that conditions are overbought. If the indicator trades below 20, the financial instrument is oversold.

Forex traders also apply the stochastic oscillator to verify if market momentum is diminishing. If the indicator is in an opposite trend than the market then momentum has weakened.

Stochastic oscillators also offer the trader the alternative to employ cross over systems. It involves a cross of the faster %K over or above the slower %D line. Should it cross above the %D line, this is an indication that it may be a good time to buy. The reverse would suggest a sell signal.

As with moving average indicators, traders should avoid using the stochastic oscillator when the markets are ranging. It is mostly applied with a variety of other Forex indicators for its true benefit to be seen.

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Why RSI, the Relative Strength Indicator, Surpasses All Other Momentum Indicators

Whether you are a seasoned trader, or a brand new trader, learning the key concepts of the RSI, Relative Strength Index, is perhaps the most important thing you can do to advance your trading career.

The concepts are simple to learn but not readily available. Instead, the mythically incorrect concepts of RSI are perpetuated on nearly every site. These are:

1. Sell when RSI reaches 70 because price is overbought.

2. Buy when RSI reaches 30 because price is oversold.

3. When price crosses 50 RSI, this can be a good entry point.

4. And divergences are good trading signals.

It is easy to provide statistical data that shows that this information is incorrect.

There are reasons however that RSI can be a great tool to add to a current trading system or to act as a standalone trading system.

Here are three of the strongest reasons however, there are many, many more.

1. Because RSI takes into consideration time, price and momentum.

2. RSI has 4 signals that create profits.

3. Understanding the location of divergences and reversals on RSI will give you deep insight into the current market condition regardless of time frame or currency pair.

Traders who focus just on price do not take momentum into consideration. Because RSI is a leading indicator it can predict with accuracy where price is going. No indicator will be right all the time however, RSI will give you telltale signs that will tell you about the strength of a trend and the possibility of trend changes. Traders who make consistent profits take into consideration the aspect of time, price and momentum and understanding RSI is crucial to that end.

The second point above is one of the most important points any trader should know. If a trader understands the 4 trading signals on RSI they will elevate their trading game to the highest levels. There are two kinds of divergences and two kinds of reversals. Knowing all four and how they interact is crucial to reading any currency trading chart.

The 4 signals are: Positive and Negative Divergences and Positive and Negative Reversals. Divergences statistically are known by most traders but reversals are not. Reversals are the most powerful of the two signals and best for entering, exiting and re-entering trending markets. Divergences are best of retracements and predicting coming reversal points.

There is strong statistical data available that shows which signals should be traded in down trends and which should be traded in up trends. Knowing the difference can be the difference between profit and loss.

The last point is by knowing the location of these divergences and reversals in context with one another one can begin to "read" the market. For example, the current EURUSD hourly chart has created in less than 72 hours of trading; 3 negative divergences and 4 positive reversals. This indicates that the market is moving up and gives the traders specific points of entry.

In addition, because of the specificity of entry, stop losses and take profits can be reliably placed making risk and reward calculations much easier.

Traders who learn the proper concepts of RSI which are not typically found on most Forex websites and in most Forex trading courses will be well on their way to understanding the markets and putting money in their pockets.

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How to Use Forex MACD Indicator

The forex MACD indicator is a tool that is developed by Gerald Appel. Personally I find this indicator very useful as it has multiple features that can help to better enhance a trade and best of all, it is very reliable.

Below are what you can do with your MACD indicator

1) Identify a trend: The MACD can be used to help you identify the current trend of the market. From the position of the MACD line, you will be able to tell whether the market is currently in an uptrend or in a downtrend.

2) Identify a reversal: Besides using the MACD indicator to tell the trend, you can also make use of it to help you identify a reverse in trend. This can be done by reading the histogram of the MACD. Depending on the position of the histogram, the length of it can be use to interpret whether the buyer is stronger or seller is stronger at any particular moment. In addition, the occurrence of divergence in MACD also helps to signal an incoming reversal.

3) Confirm a breakout: There are a lot of false signal in the market and this is also the main reason why most new traders lost their money within their first few months of trading. The best way to reduce the chance of losing money due to false signal is to make use of the MACD indicator. You can used the MACD and its trigger line to validate or invalidate a trend line break or a breakout and this can save you a lot of money.

From the above, you can see what the MACD indicator can do for you. So spend sometime to play with this indicator and get use to it before integrating it into your trading plan.

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Forex Trading Software - Buy Or Sell Indicator Systems

Trading foreign currencies (the forex market) has become one of the hottest money making topics in the world, and for good reason. It is a market that offers the possibility of great returns with little start-up capital, and the opportunity for people to work from home and "be their own boss".

The novice trader must wade through a literal "sea" of information before they begin; subjects such as brokers, forex fundamentals, strategies, psychology, and money management principles, just to name a few.

A trader's choice of tools and strategies might include using trading "robots", a signal service, a managed forex account, as well as other software programs that are designed to help your trading decisions.

If you are fairly new to the forex market, or have not been making the money you had hoped, then one strategy you might want to investigate is the use of trading software that provides buy and sell signals.

These programs are not "robots" or "black box" systems. Those trade for you, with no input from you at all. A buy/sell signal software is designed to analyze the price action of the currency that you are watching, and then give you a "red light" or "green light" to tell you when to enter a trade, what direction, and when to exit. You manually enter the trade after the signal is given.

Most of the programs on the market are designed to identify when the market is trending (which the forex market does much of the time), in whatever time frame you are trading, and alert you to high probability trades.

Some programs will be completely mechanical; they will alert you when to buy, and when to sell, and you will not use any discretion at all; just follow and do!

Others will allow you to look at the signal, use other factors from your own experience and knowledge of the market, and trade the signal at your discretion. This allows you to "filter out" the lower probability signals (at least that's the goal).

In my own investigation, I have found just a few of these programs that are very useful and have a good probability of making money over time. If you are investigating these types of programs, ask a lot of questions, and make sure they allow you a certain amount of time to put the program to the test (free trial), before you commit to purchase.

If you use these programs as part of your "trader's toolbox", they will help you learn how to analyze the markets over time, and become a more independent trader. The key is, never stop educating yourself on foreign currency trading!

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Forex Buy and Sell Indicator

While there are a few free buy and sell indicators out there, you must ask yourself how accurate are they? Of course there are e few paid options out there that are certainly considering if you are serious about changing your lifestyle. One such indicator system is the forex autopilot system. This is a unique system where a trading 'robot' that actually automates the whole process for you, thus taking out all the guess work for you. As long as you have a computer the forex robot will do the rest for you.

This buy and sell indicator system works by you setting the parameters that you want to to trade with, the robot then scans the market actively seeking trends and tells you when to buy and sell, the amount of risk from your end is minimal as you set how much you want to trade with. With the forex autopilot system you have access to a demo account that has a free forex buy and sell indicator built in, so you can see how the system all works without you having to risk any start up capital.

If you are skeptical of this system, and you are thinking are there other options out there for me? well you could attend a seminar or buy books on the subject and this is fine if you want to learn everything there is is to know about forex trading. The only problem is that learning about how forex is that not easy and take a long time to learn. The forex autopilot system can get you up and running quickly and if you are someone like me who likes have a system that runs on autopilot then have a look here [http://www.squidoo.com/forexautopilotsystemreview] to see how it all works.

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The Best Forex Swing Trading Indicator

Are you looking for an indicator to give you an edge in your swing trading? Perhaps the most popular and widely used kind of indicator for swing trading, or any kind of trading, are momentum oscillator indicators. There are a wide variety of momentum oscillator indicators available, one of which is called the stochastic indicator.

Momentum indicators are leading indicator. They promise to lead price movement by offering insight into potential future price action. Momentum indicators do this by measuring momentum, or by how much the price of any instrument changes. As a currency pair or stock increases in price, momentum indicators will rise along with price movement. However, as their rise begins to slow the momentum indicator will begin to drop. This warns of the slow down or loss of momentum in the currency pair or stock.

The stochastic indicator is a momentum based indicator and offers to alert traders of when a currency pair or stock may be overbought or oversold. When an instrument is overbought or oversold, some kind of a pullback or adjustment is expected. The stochastic indicators can warn of when these overbought and oversold levels may be potentially reached, allowing traders to either tighten their stop losses to avoid giving back too much to the market or closing their trades and taking their profits before the market drops and erases any profits they had open.

Momentum indicators are widely used by hedge funds, banking institutions and many large corporate swing trading companies. One of the most popular is the stochastic indicator. When used properly, you will know in advance when markets may be reaching overbought or oversold levels, giving you time to manage your trades before it is too late.

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The Best Way to Trade With MACD Indicator

The MACD indicator is one of my favourite indicators among so many different indicators and it has never been omitted from any one of my trading strategies.

Unlike other indicators, the MACD can be used for more than one way and it is very versatile. There are 3 ways you can make use of this indicator but in this article, I will be talking about the best way you can trade with MACD.

The divergence of MACD is one of the most reliable trading signals that you can get from your chart. There are 2 main types of divergence namely positive and negative divergence.

1) Positive Divergence: This is formed when the market makes lower lows while the MACD indicator makes higher lows. This is an indication that the market is going to reverse from a downtrend to an uptrend. The divergence is a leading indicator as it is usually signaling to you that the market is reaching its reversal point. However, you should not think that it will reverse immediately. Some reversal happen sometime after the divergence is formed.

2) Negative Divergence: To form the negative divergence, the market will need to make higher highs while the MACD makes lower highs. This is an indication that the market is reversing its direction from up to down.

The best way to trade the MACD divergence will be to make use of a trend line, you should only enter your trade when the price breached the trend line in the direction of the divergence.

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