Best Forex Trading Indicators - 2 Types of Tools That Can Explode Your Trading

Trading in the foreign exchange market was once a privilege only for large banks and major currency dealers. However, through the advancements of technology more and more "normal folks" are now able to buy and sell on the market from the comfort of their home.

But without the normal education that the pros get, new traders can feel left out in the cold. This is why many traders wisely turn to Forex Trading indicators to help get a handle on profitable trading.

The fact is that these are powerful tools that can help you to organize and measure movements on currency pairs.

The Myth About Forex Trading Indicators

A lot of traders, especially beginners, are led to believe that Forex trading indicators are some sort of secret that will take them down the path to riches.

However most seasoned Forex traders will tell you that this business involves hard work, risk, discipline and the ability to follow rules and trade through tough periods during and draw downs. In other words, if you are looking for a guarantee, trading is probably not for you.

The Facts About Forex Trading Indicators

That said trading the global foreign exchange market can be a highly profitable business, especially with the high amount of leverage that most brokers will give you.

However it is critically important to learn the basics of how to uncover profitable trading opportunities with simple Forex trading indicators.

The Two Types Of Indicators

Forex indicators can be placed into two basic categories - the continuation indicators that follow trends such as moving averages, and those that analyze the velocity or momentum of price movement.

These types of indicators work simply because they define and organize the patterns into an understandable set of tools. Once you learn how to recognize and interpret these indicators, they will tell you which market force, if any, is strongest and where or when there may be a significant imbalance between the two opposing forces that will move the markets.

Moving Average Indicators

Moving averages are one of the most popular and easy to use tools available to the Forex traders looking at timing up or down trends. They help show underlying market movements and can provide additional supporting information on buy and sell decisions.

Moving averages work best when a market is trending, and are less effective when a currency pair chart moves sideways (in a trading range).

This means that you need to first identify markets that display some trending characteristics before attempting to use moving averages.

Moving averages may seem boring compared to other technical indicators, but there is more than meets the eye when it comes to this simple tool.

Moving averages can be applied to any price or data series to generate buy and sell signals for both long and short positions. And they can be used to establish support and resistance points in the markets.

Momentum Indicators

Momentum or Rate of Change oscillators involve the analysis of the rate of price change ,rather than the price level that Moving averages use. The speed of price movement and the rate at which prices are moving up or down provide clues to the amount of strength or weakness of a currency pair at a given point in time.

Momentum oscillators, such as RSI, stochastics, or MACD, are a favorite indicator of many traders and they are best applied to non-trending or sideways markets. So they are the best tool to use when a Moving Average indicator is practically useless.

This is because momentum indicators are generally a leading indicator, and will often move before price action does.

These Forex indicators are set up as an oscillator type of indicator. They help to reveal turning points and extremes when a market has been flat for some time. In physics, momentum is the tendency for an object in motion to stay in motion, and this is the principle behind the momentum indicator.

Combine For Best Results

Between these two indicators you should be able to build a solid trading tool box. Moving averages for currency pairs that are moving up or down with regular consistency, and Momentum indicators for the times when the markets move lazily sideways.

One More Consideration For Forex Trading Success

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Spot the Day Trading Indicators

Professional day traders always have a strategy, this means that they have a method that is designed to have a positive effect on a certain trade that could last as little as a couple of hours. The day trading strategy is the most popular strategy out there and it is for this reason that many forex experts provide strategies that are used for day trading in the stock market.

The great thing about the forex currency market is that it is particularly liquid, this is the reason that a great number of people can use the same strategies and day trading indicators without having a significant effect on the markets pip prices. The art of being a successful day trader is to have plenty of discipline, there are many times when you may have a loosing day but you will need to be able to look at these loosing days and not worry. This is the mindset of a successful day trader.

If you do not have a set plan of action then you will find it impossible to become a successful day trader, there are far too many other people trading on the stock market. People who trade on the stock market are attracted by the huge leverage and the many other benefits that are available to the day trader. The problem with this is due to an influx of new traders the currency prices can be pushed up and down without the use of any set strategy or system.

It is of utmost importance to know the personality of the market you have decided to trade in, I say this because each market has it's very own characteristics and day trading indicators that must be known by the trader if they are to be successful. Day trading in the stock market is no different, you need to be able to look out for the various day trading indicators and know exactly what these are.

As I have said before the secret to success day trading stocks is to have a good system or strategy and be disciplined enough to stick to it, this way you will be sure to turn a profit.

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What Happens When You Finally Start Trading Forex Without Indicators?

It seems like the moment a new forex trader starts off his/her trading career, the first thing they do is just blast their charts with every single indicator that their charting platform carries. I know that's what I did when I first started trading. I look back at that now, and wonder how in the world could I even tell what I was looking at? The entire chart was nothing but lines, shapes, colors, graphs, oh my!!

The day that you can trade forex without indicators is the day that you can finally say "I get it now!"

If there is one thing I have learned in my trading career, it's this: The worst thing you can have when trading is too many opinions, and that's exactly what you get when you use indicators.

You've got an MACD saying buy, you've got Stochastics saying sell, you've got moving averages saying buy, and you've got RSI saying sell. How could this not drive you completely nuts??? It's like a severe case of multiple trading disorder. In your ear, these indicators are saying "don't listen to the other one, I know which way the market is headed."

The truth is none of them know where the market is headed. These indicators are both lagging and completely random. All it is, is just a static formula that's being used irregardless of market conditions.

The real truth can be found in price action. There are no formulas involved. It's just a simple case of both seeing and understanding the market. Once you do, you can really see the power of what a simple bar chart can provide.

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Trading Forex With Trend Line Indicators

Trend Lines are the most powerful technical analysis tools. They allow you to gauge the trends direction, identify potential reversal levels and enter trades with low risk and high reward. In this article, you will learn how to use trend lines indicators in FOREX trading.

Trend lines are a basically a dynamic support or resistance level. Unlike horizontal levels which are a static level, the trend line is a level that advances with time. The trendline can be either ascending trendline or descending trendline.

There are two main methods of trading trend lines.

Method 1: Bounce

The core of this trading method is that support or resistance are a psychological barrier that price does not break easily. Traders that are trading the bounce wait for price to touch a support or resistance trendline, and to begin a reversal. They then join the new trend, entering in the direction of the reversal.

This method has two main advantages: the first one is that the trading signal behind the trade is based on support and resistance and therefore is strong and reliable. The second advantage is that the trade is taken close to the level, which means that the stop loss is very tight and risk:reward is good.

Method 2: Pullback

The pullback method is slightly different, though it is also based on support and resistance. The basis of the pullback method is waiting for price to break the trend line and then retrace back. Then, traders enter trade in the direction of the breakout.

This method is more reliable than the bounce method as the trader enters trade after a breakout has been validated, and therefore has the trend on his side. However, these trades are much less frequent and therefore it is hard to base your entire trading methodology on this method alone.

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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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Currency Trading Charts - How to Use the Main Indicators to Forecast Price Movements

Even if you're new to currency trading (or forex) then you'll certainly have come across currency trading charts. And with them invariably come a number of indicators designed to help you interpret what's been happening on the chart and, more importantly, what's most likely to happen in the future. This article will help you decide which of these indicators can help you the most and which can be ignored.

1. Simple Moving Average (SMA)

If, for example, you have a 30 period simple moving average setting then it shows you the average price over the previous 30 accounting periods. So if it is an hourly chart, i.e. where each bar, or "candlestick" represents the price movement of one hour, then the SMA shows the average price of the last 30 hours.

You can tell at a glance from this whether the price has been rising or falling over that period. This in turn shows you what the current "trend" is. If you trade following the "trend", as many successful traders do, then the SMA is your guide.

It's normal to use two SMAs, for example a 5 period and a 30 period, if you're a short term trader, or a 25 period and a 150 period, if you're a long term trader. You then watch out for the shorter period SMA crossing over the longer period SMA, which is often a signal to go long or short, as the case may be. The strongest signal is where the current price goes through both the SMAs at a steep angle.

2. Bollinger Bands

Bollinger Bands are two lines that reflect the volatility of the market, very similar to support and resistance levels. It is frequently found that when the market price touches or goes through one of the two lines that it then tends to return to the middle ground between the two. If the lines are close together it means there is a lack of activity in the market, with little buying and selling. Increased activity causes the lines to spread further apart in the direction the price is moving.

One thing to look out for is where the Bollinger Band lines are close together for a period of time. This indicates a lack of buying and selling, where traders are as yet undecided as to whether the price is too high or too low. Very often, once the price moves through one of the lines there is a strong movement in price in that direction, market activity increases and the lines accordingly move further apart. They are more of a short term indicator.

3. Stochastics

Stochastics uses the moving average principle to determine whether the market is overbought or oversold. The theory is that if the moving average lines are above 70 the market is overbought (which means you should buy) and if they are under 30 the market is oversold (so you should sell, or go short).

4. Relative Strength Index (RSI)

This is similar to stochastics in that it shows if a market is overbought or oversold. It uses the markers of 80 and 20, rather than 70 and 30, but the principle is the same. If your stochastics and RSI indicators agree on an overbought or oversold market then it's a very strong signal to buy or sell, as the case may be.

5. Parabolic Stop And Reversal (SAR)

Everyone would like to buy at the bottom of the market and sell at the top, or go short at the top and long at the bottom. In this case, Parabolic Stop And Reversal is probably the best indicator for spotting reversals in trend. It comes into its own in long term trading. The signal appears on your chart as a series of dots. When the market price crosses the dotted line going up it's a signal to buy, and vice versa.

There are other indicators, and all have their strong points and drawbacks. But your knowledge of these five will help you make a majority of correct decisions on your currency trading account, both for going into the market and coming out with a profit.

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Which Forex Currency Pairs Are the Best For Range Trading?

Have you ever noticed that one trading strategy may work absolutely beautifully with one currency pair, but it may fail miserably with another? That is because each currency pair has its own personality, special behaviors, and idiosyncrasies. And if you don't understand and pay attention to these differences, you will be leaving money on the table. So let's look at which currency pairs are the absolute best for range trading.

Every currency will range at one time or another. Especially after large moves, traders need to take a break and step away, and so the currency tends to range back and forth. But some currency pairs are absolute goldmines for trading ranges.

Let's start here - you know that interest rates are a huge factor (in fact, maybe the single most important factor) when it comes to the foreign exchange. You will get the best range trading opportunities on currency pairs where each country's interest rate is similar.

So that means that currency pairs like the EUR/CHF and the CHF/JPY are going to be good excellent range trading pairs. That is because their interest rates are very similar, so money is not flowing strongly into either currency in comparison to another. Bring up a chart of the either of these currencies and you will see that they do not move around that much.

On the other hand, currency pairs whose countries have large interest rate differentials between each other (i.e. AUD/JPY and AUD/CHF) will tend to range much less.

Some quick basics on range trading:

1) You don't have to wait for the price to actually hit the top and bottom of the range to enter a trade. Divide the range into 4 even sections, wait for the price to reach the upper or lower quartile, and then look for indications the market is turning.

2) Use Bollinger bands, the ADX indicator, or the Average True Range indicator to tell you then the market may turn.

3) Always put your stop loss outside of the range - never inside.

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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 Forex Trading Strategies? Stop Using Indicators

For anybody that has been searching for the best forex strategies, I empathize for you. You have to go through a lot of garbage on the internet to figure out how to trade forex. If there is one thing that most of these strategies have in common, it's probably one thing: the reliance of lagging indicators. Lagging indicators such as moving averages and statistics. By the time these kind of indicators provide a signal, the move has already happened. Here is the best forex trading strategy I can give you: Clear out your charts. YOU be the indicator.

Just look at how the currency is moving. Price action can tell you a heck of a lot more about what the markets are doing than some RSI or MACD Indicator. All the information you need is right there.

There are certain price patterns that happen all the time. Whether it be on a 1 minute chart or a daily chart, these kind of pattern are predictive in nature. They get repeated continuously.

If you think about how most investors made their money in the early days before there was even such a thing as charting software, all they had to rely on was price action. They used the price movements as their sole indicator for opening and closing a position. Believe it or not there are still people today that don't even look at a chart when trading. They just look at the numbers move.

The best forex trading strategies in the world should have nothing to do with some magical indicator. If people in the early 1900s can trade the markets just by using price action, what's your excuse?

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FOREX Trading Tip - Use Leading indicators For Greater Profits Here's How

Many traders like to buy dips to support or sell into resistance but this simply ensures they lose.

This FOREX trading tips is all about using leading indicators to confirm a move, rather than simply assuming support and resistance will hold.

Let's look at it in more detail.

Buying Into Support and Sell Into Resistance.

You hear this tip all the time, but it doesn't make money.

It is based on the old saying "buy low sell high" which is another phrase that won't make you money.

If you buy into support or sell into resistance then the logic is that you will have low risk and high reward if the levels hold.

The important word here is "if"

If you trade FOREX then you don't want to rely on "if" and hope - you want indicators that will increase the odds of these levels holding and your chances of making a profit.

If a price is speeding toward support or resistance then it will break as often as it holds, you therefore need to watch for changes in price momentum and that's where leading indicators can help.

Getting the odds in your favor

If you want to buy support and sell resistance and get the odds in your favor do use the following FOREX tip.

You can use lagging indicators as well as trend lines in FX trading to denote areas of support and resistance and the ones we like are:

Bollinger bands and moving averages.

These indicaotrs like trend lines should NOT be used to enter trades.

When buying dips to support or into selling resistance, you want confirmation that the levels are going to hold - before prices reach these levels you want confirmation of the turn in advance.

When price momentum turns above support or below resistance you can enter with increased odds of success.

The best timing indicator by far is the stochastic.

Look it up and learn all about it as it's a great under used tool.

Another great indicator is the Relative strength Index RSI.

Combine the two and watch for confirmation on both and you have a powerful combination you can use to increase your odds of success.

They will give advance warning of a change in price momentum at support and resistance and when they turn in your favor you can enter the trade.

You don't predict with the above.

You act on confirmation and this will increase the odds dramatically in your favor and increase your overall profitability.

This FOREX tip is obvious, but it's surprising how many traders simply hope a level holds rather than looking for confirmation

Don't make the same mistake always act on confirmation when trading FOREX.

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The Very Best Forex Trading Strategies

Everyone is looking for the best forex trading strategies around. While there is no substitute for hard work and a thorough knowledge of the forex market itself, there are shortcuts to be taken to make your life a great deal easier.

Forex software is one of these shortcuts and forex trading strategies. Traders of all levels of experience find a use for it in their campaigns. This is software which was designed to typically beef up one of two essential areas of trading: efficiency and accuracy. I'll address the efficiency aspect first.

The forex market keeps very long hours, extending every hour of every day and night and going long into the weekend, as well. While this is advantageous for forex traders, it also requires that you be able to not only know what is happening in the market around the clock, but also be able to act on it quickly and efficiently. Because this can be largely impossible for anyone trying to maintain any kind of social life, forex software was developed.

Forex software also serves as an arguably superior and unquestionably more cost effective substitute for hiring a broker. It keeps track of the market around the clock, and steps in to trade on your behalf when you are not there to do so yourself, ensuring that you land on the winning side of your trades near 100% of the time. This is all without taking the large chunks of commission that a broker would take.

Moving on to accuracy, arguably the best of the forex trading strategies associated with forex software is that of the trend indicator. Trend indicators are mathematically designed algorithms which also analyze the market around the clock but run that information through their algorithms to generate remarkably accurate predictions of exactly where the market will go next.

The reason that these tips are so precise can largely be attributed to the fact that they are tested and tweaked within real campaigns within the real market for months and sometimes years in advance. As you can imagine, this information is invaluable as precise reads allow you to effectively jump in and out of the market at peaks to maximize your profit and prevent loss and risk. If you want the most precise information affecting your trades, there is no substitute for forex software, the most guaranteed of the forex trading strategies.

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Forex Trading - Why Trying To Determine Overbought And Oversold Positions Is A Dangerous Game

There are many different methods used by traders to trade the forex markets. One of which is to constantly be on the look out for overbought and oversold positions, but is this really the best way to trade?

If you have any experience at all of trading, whether it's forex trading or stock market trading, you will know that it's virtually impossible to consistently enter a position at the exact top or bottom of an instrument's trading range.

Even with the use of multiple technical indicators it is extremely difficult to do. Sure you may get lucky every so often but the reality is that most of the time you will enter a position too early and sometimes the price may just race through what you perceived to be the top or bottom.

It's important to realize that a currency pair can remain overbought or oversold for a very long time, and just because tried and tested indicators like stochastics and RSI, for example, indicate that the price is overbought or oversold does not mean that the price cannot go a lot higher into an even greater overbought or oversold position.

This is true in both short and long time frames, and can often result in a trader's stop loss being quickly hit as the price continues to become even more overbought or oversold.

For this reason my own personal preference is to follow the overall trend and not try and second guess the market, because this is what you're ultimately doing when you're trying to call tops and bottoms all the time. You're effectively going against the trend and over time this is not the most profitable way to trade in my opinion.

A more effective way of trading is to wait for confirmation of a reversal before entering a position. Yes you may not yield as many points trading this way, but it's much easier to go with a trend than fight against it.

For example as well as using traditional overbought and oversold indicators you could use crossover indicators such as MACD, TRIX and EMAs to indicate that a true reversal is taking place. You can also wait until short term support and resistance levels are breached for additional confirmation.

The main point I want to get across in this article is that if you're just using certain indicators to call the top or bottom of a market, or worse still just using your own intuition, you are playing a very dangerous game, and you are unlikely to make consistent profits in the long run.

If you do choose to trade this way you're much better off sacrificing a few points by waiting patiently for additional confirmation that a true reversal is taking place.

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What MACD & RSI Mean in Forex Trading?

As a forex trader your main objective must be to become a profitable trader. In order to achieve this goal, it is vital that you learn how to use the widely known technical indicators. These are very useful parameters that will tell you with a high probability what the forex markets are more likely to do in their apparently disordered behavior as observed on the forex charts.

Among these indicators you will find the MACD and RSI; but what’s the meaning of these letters?, you may be asking yourself. Well, here is the answer:

Moving Average Convergence Divergence: MACD is a more detailed method of using moving averages to find trading signals from price charts. Developed by Gerald Appel, the MACD plots the difference between a 26-day exponential moving average and a 12-day exponential moving average. A 9-day moving average is generally used as a trigger line, meaning when the MACD crosses below this trigger it is a bearish signal (time to sell) and when it crosses above it, it's a bullish signal (time to buy). More information here; [http://www.1-forex.com]

As with other studies, traders will look to MACD studies to provide early signals or divergences between market prices and a technical indicator. If the MACD turns positive and makes higher lows while prices are still tanking, this could be a strong_buy signal. Conversely, if the MACD makes lower highs while prices are making new highs, this could be a strong bearish divergence and a sell signal.

RSI stands for Relative Strength Index. The RSI measures the markets activity as to whether it is over bought or over sold. It gives a trader an indication as to which way the Market is moving. It is important to note, that this is a leading indicator and thus allows one to see what the market is about to do and then act accordingly. The higher the RSI number, the more over bought it is and conversely the lower the RSI number, the more over sold it is. It is a great leading indicator for the micro and macro reversals in the forex market. By using an RSI on the 1 minute chart set at a period of 18 and overlaid on the bottom of your charts tend to give the best entry signals. This can also be applied to the 5-minute chart as well. The two significant entry numbers are 25 and 75.

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The Pros and Cons of Trading Forex Momentum Indicators

Lets get straight to it, the markets are open and there's work to be done! Technical indicators can be grossly divided into two categories, the oscillators and the forex momentum indicators. The biggest difference? Oscillators are leading indicators, whilst forex momentum indicators lag. A little like the hare and the tortoise. And with them, come very similar problems!

This article will focus on Forex Momentum indicators, the pro's and the con's and how you can overcome the problems associated with lagging, leading indicators!

Lets Start with Forex Momentum

Forex momentum is the rate of change in price and are based on the trendlines on your price chart. Is is an indicator of volume in the forex market and whether the currency is overbought or oversold. High momentum indicates overbuying and low momentum indicates the opposite, overselling.

Forex momentum can be used to indicated a buying or selling opportunity. If momentum is low, only to rapidly shoot back up towards the zero line you have a buy signal. And the opposite applies for a sell signal.

The Pros & Cons of a Lagging Indicator

One of the best descriptions of a lagging indicators I've come across compared them to computer virus software. A leading indicator warns that you are about to download has a computer virus. A lagging indicator tells you after you've got the virus. I'll leave it up to you which one you want!

Why bother with lagging indicators then? Leading indicators are subject to fakeouts. You are essentially taking an educated decision on on the market is going to move so it is important to factor into your money management system that relying on leading indicators can be risky.

Forex momentum on the other hand puts you in a position where you already have evidence of the way the market is moving (ie. looking at the trend) so you are less likely to suffer a fakeout.

Missing out on Money

The most frustrating aspect of working with lagging indicators is both the late entry (and exit) on your trades. Since you miss the start of the trend (you are waiting for you indicators to let you know) you miss out on those early profits. That doesn't sound too bad does it? Actually it is bad as the biggest profits are generally made at the beginning of a trend! Ouch!

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Currency Trading Tips - How to Choose the Best Pair For Forex Currency Trade

Does anyone of you have an idea on which currency pairs are the best to trade in forex? Is it the major currency pairs, the cross pairs or the exotic pairs? Well there isn't really a right and wrong answer; it depends on how you define 'best'. If a currency pair has tight spreads, it may be considered the best trading currency pair for you, but may not apply for others. So now we'll discuss on various factors on choosing a forex pair:

1. Spreads - There is always an advantage to trade currency pairs that have a tight spread in forex trading. It means that lesser spreads equal to more profit, lesser spreads give you more room for price fluctuation if you have a tight stop loss and lesser spreads may help you to breakeven your forex trade earlier. Does that make sense to you? EUR/USD has the tightest spread of 2 to 3 pips for most forex brokers and even 1 pip for some brokers, while GBP/JPY has spread of 6 to 10 pips. For some forex traders who care a lot on spreads, he will certainly choose the formal over the latter.

2. Trendiness - For chartist traders like me, I depend mostly on technical indicators to help me decide which forex currency pair to trade. Although volatility is considered good, but it is then more risky and need a wider range of stop loss. e.g. is GBP/USD. On my forex trading screen, I have 7 to 8 currency pairs in smaller windows, so that I'm able to decide which pair is the trendiest, even when all pairs seem to have a trend. Though EUR/USD and USD/CHF is negatively correlated 90% of the time, you will sometimes find either of the pairs trending better than the other. Therefore you will want to choose the more trendy pair to trade with the help of some forex technical indicators.

3. Trading Sessions - The best time to trade forex is when the market is the most active and therefore has the biggest volume of trades. During Asian hours when Tokyo opens, the better trading time is from 7PM EST to 10PM EST. But since not all the currency pairs are actively moving, you may want to trade AUD/USD as it starts to move during the stated timing. When London market opens, this is where you can trade almost all the currency pairs. I will trade from 3AM EST to 6AM EST depending on the trendiness of the pair; example is GBP/USD, EUR/USD etc. Another trading session which will experience high volatility is from 8AM EST to 12PM EST where both the London and U.S. markets are open at the same time.

After looking at the above factors, do you think there is a right and wrong answer on choosing the best forex currency pair? I doubt so. As long as you are using a reliable forex trading system to help you, all currency pairs can be profitable. To know more on the behavior of the currency pairs, you can find it in my FREE forex ebook with a forex trading system that can help you generate profits consistently.

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Relative Strength Indicator - What Does It Mean To Your Forex Trading?

Whether you are a veteran trader, or a just learning the ropes, educating yourself about the key concepts of the Relative Strength Indicator (RSI) index is one of the most important things you can do to become a successful trader. This concept is an easy one to learn, but details on it are scant. You'll have to search for material about it, or you can read the basics here.

One of the first things you should know is that incredibly incorrect information regarding the Relative Strength Indicator is posted on almost every Forex website. Some of the most common myths are to sell when the RSI reaches 70 (since this supposedly means the currency is overbought at that price), to buy when the RSI hits 30 (because currencies are supposedly oversold at that price), and that when the RSI reaches 50, this is a good spot to enter the market. All of these are myths, and wildly incorrect. You would do well to learn the proper information, so you can profit from it, rather than wasting your money on bad trading advice.

Even though there are a lot of myths regarding the RSI out there, it is still an excellent tool to use in your trading. This is because the RSI takes time, momentum, and price of the market into consideration, it has four signals that can be used to bring you profits, and it gives you insight into current market conditions.

The four signals that the RSI uses to alert you to profit opportunities are Positive and Negative Divergences and Positive and Negative Reversals. Reversals are best for knowing when to enter the market, and divergences are best to predict coming reversal points. RSI can really show you with great accuracy where the price of a currency is going, and if you take time and momentum into consideration with this, then you can really stand to profit well. Most traders who make consistently good profits use the Relative Strength Indicator index all the time, because it can provide so much information. Because information on the RSI is scarce, if you take the time to learn it, you will be putting yourself head and shoulders above the rest of the Forex traders out there who do not use it. It will give you an edge. As we all know, when it comes to Forex trading, any edge you can get stands to benefit you, because so many people jump into this market not knowing anything at all about how to profit in it. If you know RSI, you're almost bound to make some money.

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Timing Camarilla Pivot Point Forex Trading Signals For Maximum Profits!

How to get the most camarilla pivot point forex trading signals by trading currency pairs at key times for optimal profits. Many people have read my previous article on forex market key timeframe's to trade around and so far I am just covering a lot of conceptual stuff the simple ingredients to successful forex trading. Today we will put a forex signal together and show just how fun and easy it is to make forex profit. We will be working with forex flows and basics theory on how you can generate forex signals on the forex markets for fast easy profits!

I will be using our free software in this example located at http://www.digital-intuition.com and while there is a premium service for our forex signals I am going to layout a simple strategy using only the camarilla calculator provided in the software. No charts, NO tons of indicators just lots of simple trading theory in words you can understand that will get you in the flow of the market.

When developing some of the mechanics of our own trading we coined the term digital Intuition and work off the premise that there is truth in numbers. In this digital age it seems almost anything can be expressed in numbers so it should not be hard to believe that news, sentiment and even fundamentals can be factored into the numbers in a forex currency pair. Lets look at my 3 favorite keys to catching the forex flow and see how they can work together in a synergy building forex signals.

1. Time: I touched on this in my previous article on market timing but you want to be in the market positioned well during the most volatile points of the day.

You can never catch every pip but it is likely you will catch the most of a movement when the market is moving most. Timing your trades around when the market is cooking is a key ingredient to my recipe for profits in the forex market.

2. Price: OK have you ever heard the saying that "you have to stand for something or you will fall for anything". In forex trading this is very true. Let me explain what I mean more clearly. You have to be either close to support or close to resistance before you take action.

Support = You think the market is going to turn and trend upwards but if it has been broken you think a breakout is happening

Resistance = You think the market is going to turn and go down but again if it is broken you think a breakout is happening

Anywhere in the middle = I will fall for any trick the forex market throws at me because I am not positioned correctly.

3. Volatility: OK let me point out the last component for you. Get up and run as fast as you can at top speed around your neighborhood for this little experiment. Probably in a while you will get exhausted and eventually slow down to a brisk walk at best. The forex market or any market in my opinion is going to be the same way. Why because the market is composed of human beings ( but what about the automated trading Alfred )? Well who programmed automated forex trading ( human beings ) ? So you see after volatility you can expect a market to cool down and after long periods of no volatility you can expect a market to cook.

Putting it all together. Lets use these 3 keys to unlock a synergistic forex signal. Pull up a chart if you must on USDYEN April 24 - 26 of 2007. Now minimize that chart because in my opinion charts are great for showing you a visual of what is happening or what has already happened on the forex market but I don't use them for forex signals in the way most people do with all those indicators.

I want you to visit http://www.forexflows.com and download this software. The software is completely free and this is all that I will be using to setup this position. Once installed you will be using the camarilla pivot calculator. Let me touch on something here briefly and explain. The reason I am so big on Pivots is because they are a predictive indicator. Most indicators simply revolve around a linear representation ( drawings ) over the current market action. In order to draw anything you have to know the beginning and end points therefore most indicators in my opinion are not very useful especially for entry forex signals. Pivots give you hard numbers that everyone will see ( nothing left for interpretation ) and they try and predict pivotal points on the coming day's market. This lets you get a plan together in advance instead of jumping at a minutes notice when the market moves like 80 - 90% of forex traders.

OK lets plug in some numbers and let me show you an example of a forex signal at work. I spotted this trade with no indicators at all just completely using the 3 elements above and my simple camarilla Pivot calculator included free in the forex flows software.

Time: Firstly I am not even looking for a forex signal until at least 6:00GMT or later. I will sometimes start as Germany opens just to get the last little pips before the UK market opens and a run starts. That is it guys I did not touch the chart because one of my synergy components is time itself.

Price: OK now I plugged in all my numbers into the pivot calculator and saved 3 consecutive days worth of pivots. The pivot Calculator in forex flows has 10 slots available that you can label and it will show you 3 consecutive Central pivot points #1 is the oldest and #3 is the newest.

The 3 Central Pivots were

APR 24: 118.57

APR 25: 118.58

APR 26: 118.59

Camarilla Pivots April 26

H4 118.97

H3 118.81

H2 118.76

H1 118.71

L1 118.60

L2 118.55

L3 118.50

L4 118.34

So the central pivots are very slowly trending up. In fact they are moving to slow ( 1 point a day for the last 3 days ). Question:What will happen after this low Volatility most likely?

Answer:

The market will start to cook

When or around what TIME will this most likely happen?

Answer: During one of my key timeframe's explained in earlier articles.

Where or at what price do you enter?

Answer: At 7:00GMT on April 26 USDYEN was trading

at 118.85 this is just above H3 on our Camarilla Pivot Calculator. Now here is where I want to point something out.

A: The last 3 days central Pivots were moving up

B: We had just broken H3 and comon Camarilla theory said that was EXTREME resistance.

C: The market opened modestly above Central pivot so I usually look for long positions on those days.

All these factors

Timing: Just after 7:00GMT market can move big in the next 3 hours

Price: We just broke H3 wich is extreme resistance so predicting a breakout is not a stretch especially since we have been slowly trending up 3 days prior.

Volatility: Central Pivots have been only 1 Pip each day for 3 days so the currency is prime for a breakout.

Now pull up your chart and Viola all our components worked together in a synergy to give us a forex signal at 118.85 and we could ride this breakout all the way up until

16:00GMT 119.51 for 66 Pips profits or $660 trading 1 standard lot. Again Time told us when to leave at 16:00GMT because if you read my other articles you already knew most of the action was over at 16:00GMT and we exit the forex market when most of the action is over. Notice I did not use any indicators but my simple Camarilla pivots and an understanding of the natural flow of the forex markets. This is why we call our forex signal software forex flows. I hope this has opened up some ideas for you guys about trading with synergy on your side and riding the natural flow of the markets.

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Stochastics Is A Widely Used Indicator In Forex Trading

Stochastics is one of the most popular indicators in forex trading. You can find it on almost all platforms and charting services. But most traders use them incorrectly. Stochastics is an oscillator that has two components %K and %D. This is the formula to calculate K=100(C-L)(H-L) where C is the Close, H High and L the Low of the period. Typically this period is 14 days. However, 9 days period is also popular. %K is the 3 day MA of K and %D is the 3 day MA of %K.

Fortunately, you don't have to go into all this maths unless you want to fiddle with it and see if you can make it work better. One common question is how many days to use in Stochastics. Stick with 14 days as it is the default. Longer period means lesser signals and lower whipsaw while shorter periods means more signals and more whipsaw.

Stochastics is often referred to as the overbought and the oversold indicator. When it moves above the 80 line, the market is said to be overbought and when it moves down below the 20 line, the market is said to be oversold. But simply buying on overbought and oversold will make you lose money.

Overbought and oversold condition only works in the sideways market but it completely fails in a trending market. So, one way to overcome this failure is to buy when the stochastics is above 80 and %K crosses down below %D. Similarly, sell when the stochastics moves below 20 and %K crosses above %D.

You can also trade using %D and %K crossovers that happen when the stochastics is above the 80 line or below the 20 line.

Whatever, stochastics is one indicator that is widely used and you must master it!

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How to Best Use the MACD in Forex Trading

Moving Average Convergence/Divergence (MACD) is known to be one of the simplest and most reliable indicators on Forex. MACD will let you locate bull divergences and bear divergences. Bull divergences and bear divergences are rare and effective patterns on Forex.

Bullish Divergence

A bullish divergence is occurring when the price reaches a new low, and MACD can't reach a new low. Bullish divergence basically shows that the downtrend is losing steam and an uptrend might be near.

For example, the price is at the same point as on the previous bottom and the MACD is in the same time at an higher point. After this so-called bullish divergence, EUR/USD will start an uptrend of more than 1200 pips.

Bearish Divergences

A bearish divergence is happening when the price reaches a new high, and MACD can't reach a new high. This will then show that the uptrend is losing steam and a downtrend might not be that far.

Like for an example, there is a certain new high on EUR/USD while MACD is at a lower level, and as a result the EUR/USD entered a nice downtrend that lasted for 2 months.

Confirmation Indicator

MACD can also be used as a confirmation indicator.

When MACD Histogram is above 0 this will only mean that we are in an uptrend. If MACD Histogram is below 0, it means that we're in a downtrend.

Using a cross above 0 or below 0 as a buy or sell signal respectively will work well during strong trends. However, in times when the market is choppy, this kind of technique will give you too much false signals. So, it is only recommended to use MACD histogram above 0 or below 0 for confirmation of other indicators buy and sell signals.

The downside of MACD is it tends to give you too many false signals during choppy markets. Thus, the best way to use MACD on any kind of market is for spotting divergences and confirming trades.

MACD is also not good in identifying overbought and oversold levels. Though, there is a possibility to identify levels that historically represent overbought and oversold levels, MACD doesn't have any upper or lower limits that would bind its movement. MACD is basically capable of overextending beyond historical extremes.

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Forex Trading - Useful Indicators to Improve Your Results

One of my favorite indicators to trade the forex markets is the Signal Bars. It tells you at a glance the trends in multiple timeframes according to various technical indicators. Let me say right from the get go that I did not invent this, but I have put it to good use. The features and benefits, and how to best use them, are what I want to share in this article.

The Signal Bars indicator resides in a corner of your MT4 screen. I prefer the upper right because I have the chart shift moved to about one-third the way from the right towards the left, so the upper right corner remains uncluttered. The Signal Bars indicator consists of three horizontal rows of colored bars, green for up, red for down, orange for no clear direction - and these colors can be customized. The rows are divided into timeframes: M1, M5, M15, M30, H1, H4 and D1 - and these can likewise be customized. Each of the three rows represents a different technical indicator. The top row is the MACD with settings of 8/17/9. Middle row is an Exponential Moving Average (EMA) with a cross of the MA5 and MA9. Finally the bottom row is labeled STR and consists of Relative Strength Index (RSI) with a setting of 9, the Commodity Channel Index (CCI) with a setting of 13 and Stochastics set at 5/3/3 and all three of these indicators need to be in agreement before a signal is generated.

What I particularly find valuable is that without having to look at the lower timeframes, you can tell when the M1 and M5 are beginning to move in another direction. If you're trending down and that is about to reverse, you'll see a dull green first, then as the trend becomes stronger it turns to a bright green. Yes, there are shades of red and green to show the strength of the move. Very useful.

The Signal Bars can be configured to show different kinds of data. These three rows of bars are the essence of the indicator. You can also display a large-font current price of the pair -again in green or red depending whether the move is up or down- which is very handy. It can also display the current spread on the pair and how many pips it's moved up or down since the open.

Further, it can show the overall daily range and the average daily range. To see how these different configurations look, visit my blog where I show a few examples. Of all the indicators available, this Signals Bar is one of the most useful and handy available. A search of popular forex forums will likely turn up the most current version of this valuable tool.

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