Choosing An Indicator For Your Forex Trading System
Over the last decade ther has been great opportunity for forex traders. It's became very easy to set yourself up as an independent trader via technical indicators from a charting platform such as Metatrader or Ninjatrader.
Now ten years later the trader has to face the problem of information overload. Which forex indicator should he use? Which markets does he want to identify; trend or range bound? With thousands of indicators online it becomes a difficult choice to make.
What is key to choosing your forex indicator is keeping it as simple as possible. Don't over complicate your trading.
You will possibly need two indicators; one to identify the trend and one to trigger you into a trade. They can be one of the same albeit set to different lengths or periods. What you want to avoid are indicators which have many lines, indicators which are too fast or too slow and most importantly, indicators which repaint.
I tend to like paint bar indicators. They paint the bar or candle a certain color when they are in a buy signal and a different color when they are in a sell signal. Things like Heiken Ashi MA indicators, TTM trend, or nonlagdots are all great indicators. Then you have momentum indicators like BBsqueeze, ultra trend and fisher transform. These are great trending indicators which you can use to decide which direction you will trade in.
If you want to use a indicator to create your stop in your forex trading system then I would suggest something like metatrader's Supertrend indicator. It really is one of the better stop indicators around.
When you've decided which indicators are going into your trading system then you just have to stick to your trading plan. Such things like; trading only in direction of your trend indicator will help keep you on the rights side of the market, trading with a stop (will help protect your trading capital); not entering on forex data releases will all go towards forming strong foundations for a great trading system.
Now you must get on with testing, backwards and forwards, your trading system and making adjustments to your settings. If you need to make drastic changes then I would suggest that accept that that trading idea/concept didn't work and move on and try something else.
Article Source: FxTradingStock.com
About the Author
You can find Forex trading systems and information on how to create a system to suit your trading and also download Metatrader Indicators for free on our website.
by: Jason Kay
Total views: 39
Word Count: 400
Date: Mon, 21 Jun 2010
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