You Don T Need To Use Several Indicators At Once

Category: Finance, Currency Trading.

The majority of people who trade forex use technical analysis to make their trading decisions.

There s no question that the internet, and the subsequent ease of access to technical charts and indicators, has led to more and more traders being able to learn and become accomplished at using technical analysis to help them make trading decisions. They generally use a wide variety of the hundreds of technical indicators available at their disposal, but how many should you use if you want to be a profitable forex trader, and can you use too many? Indeed, people will spend hours on end experimenting with numerous different technical indicators in order to find that holy grail combination that will help them to become rich from trading the forex markets. The key is to find a combination that suits your trading style, and enables you to make high probability trades that will give you a positive equity curve( ie profits) in the long run. However no combination will prove to be 100% successful. If you have a sound stop loss policy and a rigid and disciplined trading system based on certain indicators, then you can make a good income from forex trading. Indeed many top traders argue that you should minimise the number that you use, simply because the more you use, the more you will get conflicting information, and confusion and uncertainty does not equate to profits.

You don t need to use several indicators at once. For instance you may use six different indicators to help you make your entry and exit positions, for example, but you may, have four of them indicating an oversold position and telling you to enter a long position, but the other two are crossing downwards and indicating a forthcoming downwards movement, so in this case you would probably abandon the initial long trade you were going to make. Multiple indicators over different time frames will invariably give you conflicting information and the net result will be that you end up not trading at all, and essentially always being afraid to take a position. This is further complicated when you use multiple time frames because this becomes even more of an issue. This is why so many top traders recommend using just a few tried and tested indicators. You can make a decent living from forex by just sticking to a few basic indicators like RSI, or just using, stochastics and MACD support and resistance levels to make trading decisions.

You don t need to have a really complex set- up to be successful. Furthermore, like Avi Frister, some traders for example, only use one indicator, and argue that it s the only one you really need- price. You can be just as successful using just a few simple indicators than constantly trying out the latest and greatest new indicators in order to find that elusive winning combination. So if you re striving to become a profitable trader, don t overcomplicate things.

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