In today forex faq, we have a question from one of our fellow traders asking me to recommend him a good indicator that has a high chance of winning.
Below is the question:
What is/are indicators that you considered as the best indicators that have high chance of winning? and what chart period? Thanks Kelvin.
I will say that an indicator is simply a part of a trading strategy and selecting the right indicator to include into your trading plan can be a great help to you.
If you were to ask me to recommend you one or two indicators that can help you in your trading, it will be MACD indicator & Fibonacci indicator. So let me spend sometime to explain to you more about my recommendation.
The key to trading lies in support and resistance as it is the fundamental to the market movement that you are seeing on your chart. When the price moves up, it is usually being supported by a major support level. When the price moves down, it is usually being resisted by a major resistance level.
Therefore I will recommend the use of the Fibonacci indicator to help you identify those levels of strong support and resistance. To learn more about the Fibonacci indicator, you can take a look at one of my earlier post below
Besides providing good support and resistance level, the Fibonacci indicator serves as a leading indicator that can also predict for you where the price is going to move to.
The reason why I select the MACD indicator as the next recommended indicator is because it can also be a leading indicator if you know how to use it.
To use the MACD indicator as a leading indicator, you will have to make use of the divergence feature of this indicator. When you see that the price is making a higher high but the MACD indicator is making a lower high, it is a sign of negative divergence and this usually is a sign that the price is going to move down soon.
When you see the price making a lower low but the MACD indicator is making a higher low, it is what we call a positive divergence and this is a sign that the price is going to move up soon.
To learn more about the MACD indicator, you can read my earlier posts below.
As for what chart period to select, it all rely on your own trading style. If you are a person who can only spend less than one hour a day to look at your chart, I will suggest that you trade off the higher time frame like the hourly or 4 hourly chart.
If you are someone who has more time to look at your chart, you can trade off the lower time frame like the 5 or 15 minutes chart. Therefore what time frame to choose really depends on you.
I hope that I have answered your question above and if you have anything else to share, do feel free to give your comment below.