In today forex faq, we have a question from one of our subscribers asking me for the top forex indicators to use.
Below is the question:
What are the important things to check and understand before getting into deal in AUD/USD and USD/JPY? What are the important indicators and how to use it for these two pairs?
I must first state that all indicators works on all time frames and all currency pairs. The indicators to use simple depends on the strategy that you are using. So my answer below is not only focus on AUS/USD and USD/JPY, it is for all currency pairs as well.
To decide on the top few indicators to use in your trading, you have to first identify the type of trader you are.
Forex Scalper – Being a scalper, you will enter and exit your position within minutes. You will be trading with those lower time frame charts like the 1 or 5 minutes chart.
Day Trader – As a day trader, you are going to enter a trade and allow the trade to run for hours but you will definitely exit your position on the same day.
For a day trader, you will be using the hourly or 4 hourly chart to trade most of the time.
Position Trader – If you are a position trader, you will enter a trade and let it runs for days or even weeks. A position trader will use higher time frames like the daily chart or even weekly chart.
So you have to first identify which type of trader you are before you can pick the indicators that suits your trading style.
Next, you will need to identify the strategy that you are using.
Trend Trading – If you are using the trend trading strategy, you will be trying to ride the trend to profit.
You can read the post below to find out the top forex indicators to use when trading the trend.
Range Trading – If you are using the range trading strategy, you are only trading when the price is moving sideways or in a trend channel.
You can read the post below to find out which are the top forex indicators to use when you are trading the range.
Breakout Trading – When trading the breakout, you will be waiting for the price to consolidate and then make a sudden burst in one direction. In fact, all you need is to be able to tell a valid breakout from a fake out and you will be pretty profitable with this strategy.
Scalping Trading – If you are a scalper who enter and exit your position within minutes, the scalping strategy is what you are going to use.
I have recorded a video on this strategy in this post below.
Swing Trading – If you take a close look at your trading chart, you will find that the price are moving in waves. When trading the swing strategy, you are going to make money from the waves.
To find out more about the top indicators to use, you can check it out at the post below.
Once you have identified these 2 important factors, you will be able to determine which are the top forex indicators that you should be using in your trading.
I hope that I have answered your question and if you guys have anything to share, do feel free to give your comment below.