Is it possible to forex trading with several indicators?
We have passed several kinds of forex indicators that have been studied.
But it turns out that many traders also feel unsatisfactory if only by using one indicator, then they use several indicators.
So they trade forex with several indicators.
The reason is to get a better or perfect signal, unfortunately, nothing is perfect, all indicators depart with imperfections.
But it never hurts to use some of the indicators in the toolbox that have been studied before, and combine the way of its application.
Some traders may use two or three main indicators.
However, it should be noted that sometimes using several indicators can make the MetaTrader platform become low responding.
This also depends on your computer’s speed specifications.
Next, we will give several examples using several indicators in one currency pair chart.
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Bollinger bands stochastics strategy
In the first example, we use two combined indicators, Bollinger bands with Stochastic indicators.
Meanwhile, the stochastic indicator is to know the overbought and oversold area, which is one of the indicators of momentum.
The way to trade using Bollinger bands with Stochastic is to wait for both indicators to give the same signal as a trigger for trading entries.
Well, we will try to take an example on EURUSD pair by using the Bollinger band with Stochastic.
Below this is the EURUSD image on H4 when market trends are ranging or sideways it’s better to wait and see.
Look at the image above, check the signals of the two indicators, from the Bollinger band signal and the Stochastic signal.
When prices reach the upper band, you check the signals on the stochastic, and look for examples that Stochastic has shown an overbought area.
Thus both indicators have given the same signal and this is a trigger to open short positions.
And the price turns down around 300 pips until finally, the price moves near the lower band’s line.
You check the Stochastic and at the same time, this indicator shows the oversold area.
Thus both indicators have given the same signal which is a buy signal, so if you open a Buy position and it turns out that the price went up by around 400 pips this is a decent total profit.
Note, if the two indicators have not given the same signal, even though one indicator has said the signal triggers but the other indicator has not given the signal then you have to wait.
Discipline is expensive in forex trading.
RSI and MACD
Previously we have studied RSI and MACD indicators and we know that RSI also provides oversold and overbought signals.
While MACD can be a buy or sell signal by looking at the crossing of the MACD line.
Take a look at the image below, pair EURUSD with timeframe H4.
The image above shows that when RSI gives overbought signals.
Soon MACD also gives Sell signals through the crossing of the MACD line.
Thus both indicators have given the same signal for short positions.
If you do an open sell at that time then after that you will see a downtrend movement that gives profit from that position.
You must exit after the price reaches the support area to secure profit.
And then you wait again to get a signal from the two indicators with another opportunity.
After waiting a few hours, you finally see that the RSI again shows that the price is oversold, and soon MACD also gives a Buy signal through crossing line the MACD.
The two signals from RSI and MACD have met and it’s time to open a Buy position.
It turns out that prices really move up so that you are in the right position.
You get the profit again when you exit in the resistance area.
Maybe you are wondering, why RSI gives an earlier signal while MACD gives a rather delay signal.
Because both use different calculation formulas.
But it is not a big problem, as long as both signals provide a high likelihood of making a profit rather than trading a loss, it is already a good combination.
MACD, RSI, stochastics strategy
Next for forex trading with several indicators.
Sometimes traders are still not satisfied with just using two indicators in one chart.
Some traders have tried to develop the way of trading using three indicators.
In this example using MACD, RSI, and Stochastic.
How to trade with these three indicators, look at the image below.
RSI and stochastic are both momentum indicators that have a function to determine overbought and oversold conditions.
While MACD, although it can have functions to look for overbought and oversold through the histogram bar, here, is to determine entries through the MACD crossing line.
The rules of Buy and Sell, of course, you already understand easily, is to wait for the three indicators to give the same signal.
- Sell, signals are waiting for the RSI and Stochastic lines to show overbought, and MACD has crossed from the top to bottom line.
- Buy signals waiting for RSI and Stochastic to show oversold levels, and MACD has crossed from bottom to up.
By using three indicators, this possibility will minimize over-trading.
Because waiting for confirmation signals from these three indicators will rarely occur.
You need discipline by following trade rules.
If all three have not shown the same signal then you may not open a position.
Forex trading several indicators are indeed many traders who apply this method to get a better signal than just using one indicator.
Apart from the example above you can explore by trying to use other indicators with different functions.
And the most important thing in investing in forex is to obey the golden rules on high-risk investments.
Just spending money that affords to lose.
Because there is no one perfect strategy.
Even by using these three indicators there are also imperfections in its application in real trading.
Other impacts besides the technical analysis approach are the presence of news which is widely viewed by world traders, or fundamental analysis.
This can make a spike of movement in the market and as if not in accordance with technical analysis.