Indicators are the most essential tools in the Forex market. Those who are new to the trading industry always use indicators as trade filter tools. If you use the indicator, you can find the false signals. Sadly, the rookies in the Hong Kong trading community, don’t know how to deal with the indicators. They make things complex by using too many tools. Let’s find out about the top 4 powerful indicators used by pro traders. These are –
- Moving average
- Bollinger band
ADX indicator is used by the professional trend traders. It allows you to find the direction of the major trend with an extreme level of accuracy. Being a new trader, it will be tough to decide trading based on the raw price movement. But by analyzing the raw price movement, is nearly impossible to find the trend with a high level of precision. This is where the ADX indicator comes into action. Analyze the +Di and – DI curve to find the potential trade setups. When the +DI curve crosses above the –DI curve, get ready to for the bullish rally. Similarly, if the –DI curve crosses below the +DI curve, get ready for the downtrend.
Moving average is a very popular indicator. But very few traders know the perfect way to use the moving average. To make things easier, you should learn to find the perfect settings for the moving average. Instead of the default period, you should use the 100 and 200 periods. Using these two forms of market analysis is very difficult. You have to think about the conservative method to make a big profit. With the help of the professional approach, it will be hard to make a big profit. You should also learn about the different types of moving average by accessing a reputed website. It can improve your execution process. But learn its use properly to find the perfect signals in the real market.
RSI is used to find the overbought and oversold condition of the trading instrument. If the value of the RSI reading is above 70 marks, you should be looking to short the pair. On the other hand, when the RSI value trades below 30 marks, you should be looking for a long period. Using the concept of the overbought and oversold state, you can place trades with a high level of precision. But when you use the RSI, make sure you rely on the daily time frame. Using it in the lower time frame increases the risk to a great extent.
The Bollinger band is the most effective way to earn money. The lower band of the indicator gives you buying opportunity and the upper band acts as the active support. With the help of these bands, you can improve your execution process. Try to use the price action signal to trade the upper and lower band. Once you learn to trade this band, you can improve your accuracy. But if you trade the bands in the lower time frame, you will always lose trades. Remember the fact that trading is more about managing the risk with a professional approach. If you can do that you can take advantage of the indicators. But if you rely on the Bollinger band, try to improve your skills and push yourself to the next stage.
Indicators are the most powerful tool in the Forex market. The professional traders always trade with low risk even though know the proper way to use the premium indicator. If necessary, learn to use the tool with the help of the practice account so that you don’t have to lose a big sum of money. Learn to take organized steps at trading so that you don’t have to lose a big portion of the capital. Always think smart and try to improve your skills by learning from the mistakes.