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Any Technical Trader and perhaps especially the Forex Trader is interested in a better (more accurate) indicator that will give clues to the future movement of the currency pairs. But what indicators are accurate? How many indicators should I use? Is one indicator better than another in a particular kind of market? These are the questions a beginning Forex Trader must ask.

Even the most accurate Forex signals only tell the trader what is the most probable outcome of a potential trade. None are a Holy Grail that will be a Forex predictor with 100% accuracy. All require you to familiarize yourself with the indicator and see how it (or if it) relates to the market you are trading.

There are two basic kinds of indicators. Oscillators and Trending.
An Oscillator type indicator helps you track a channeling market that is oscillating (or moving up and down) in a channel.

A Trending type indicator helps you track the trend of a market that is moving basically in one direction with slight hesitations but moving on and on in one direction.

You can find dozens of each type of indicator in any charting system, most were developed for the Stock and Futures markets but some of them could prove to be accurate Forex signals as well.

Using the wrong type of indicator for the market you are trading is fatal. It would be like trying to find a restaurant in Chicago using a map of Los Angeles! You won’t get there. But if you choose the indicator type that fits the current market type, you will be one step closer to your goal.

You can look back and see how the indicator and price action of the candles interact. Is there some predictive value? Is this an accurate Forex signal? Indicators can even be “tweaked” to fit a particular market by changing their parameters, how far it “looks back” in its formula is a basic change that can give custom indicator for a changing market.

First get experience with and comfortable with an indicator. Once you feel that its past performance indicates it may give you insight into the markets then you need the discipline to actually follow it in demo account till you can see in real numbers that it is a profitable trading indicator for you.

If you do that with any indicator you are trying out, you will find those that are truly accurate Forex Signals!

Best,
Phil

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3 Comments

Comment by Forrest
2007-11-06 08:24:24

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Trackback by forex markets
2007-12-27 11:40:56

forex markets…

Thanks for sharing and keep Good Work bro… !!…

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Trackback by Melissa
2008-02-01 04:11:16

Melissa…

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