Variety of Forex indicators available on advanced Forex trading platforms can sometimes create a challenge even for an experienced Forex trader. To control the situation traders need to choose only useful primary tools in order to avoid information overflow.
Especially if you are a novice trader, we'd like to suggest you two most popular and widely used indicators to start planning your trades with.
These are: Moving Averages and Stochastic indicator.
The third place goes to MACD.
While you experiment with those indicators you will discover that they can have various settings and change their accuracy and behavior depending on the time frame and currency pair you try to use them for.
Don't be afraid to experiment until you find the best combination.
Let us also suggest you some initial settings to start your experiments with.
For EMA try next:
200 EMA - famous one, is respected by price on any time frame.
50 EMA - good one,
20 EMA - again on the favorite list
For Stochastic you will find that there are Fast Stochastic, Slow Stochastic, Full Stochastic and even Stochastic RSI (the last one is a different story). Chose either Full or Slow Stochastic and try next settings:
14, 3, 3 - standard settings
5, 3, 3 - popular settings
There you go - you now have basic tools and a base to start developing your Forex trading skills and building own Forex trading system.
As you knowledge and experience grow, EMA and Stochastic indicators could eventually yield their primary posts to your new favorite tools, but even then they won't lose their importance as they never do for many experienced Forex traders.
thank you!
fantastic
Eye opener for newbie like me.
I would appreciate if you could enlighten me on the differences between the Stochastic RSI indicator (which I am currently using) against the combination pair of Stochastic and RSI as recommended by you. Would the latter one be more accurate than the other?
Stochastic RSI is an RSI indicator is calculated based on Stochastic formula.
Regular RSI will not look anywhere similar to the Stochastic RSI, but
Regular Stochastic will look pretty similar to Stochastic RSI.
If to take 14 period Stochastic and 14 period Stochastic RSI - they tell the same story, with the exception that Stochastic RSI is able to show oversold/overbought levels a bit better.
Stoch RSI may combine values of both indicators, but there isn't much innovation in interpretation of the market. That's my opinion. I such cases I'd rather work with classic indicators, which are used by the majority of Forex traders.
yes this is true
What settings for the RSI would you use to compliment the settings of 5 3 3, for stochastic you already mentioned?
It would be RSI 5.
If to use Stochastic 14, it would be RSI 14 period.
I use Stochastic, MACD and Bollinger Bands for trading. I use them all at the same time.
For stochastic the 15, 5 ,5 setting works best for me. It shows less opportunities but the ones it does show are more reliable.
I am suprised not to see the bollinger bands in the top 3. I would not start currency day trading without it.
Great post by the way.
yes....yes...yes
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