All that we have learned about indicators and how to use them, it will add to the trading tools included in the trading toolbox, then we will make a popular indicator summary.
The tools that you have used will provide a good opportunity to get profit if you use it at the right time and in the right way.
As time goes by, you will learn a lot from your experience, and then well how to get profit from the forex market.
On your journey to success, you may encounter obstacles, but many successful traders also pass through it, it’s just that they don’t give up and keep learning to improve their trading strategies and systems.
Noted, forex trading is not an easy way to get rich quick, to become a trader, you must love this field with patience and sincerity.
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Bollinger bands are trading aids with the function of measuring price volatility when high volatility of both bands will expand, while when volatility is low then both bands will narrow.
Simple trading with Bollinger band.
Popular indicator summary Bollinger band
- Bollinger bands act as dynamic support and resistance, the upper band is the resistance area, while the lower band is the support area.
- This indicator will work well in ranging market conditions.
- In trending market conditions, middle bands often act as support or resistance where prices often bounce.
Trading parameters with the Bollinger band ranging market are.
- Open Buy when the price has touched the lower band.
- Open Sell when the price has touched the upper band.
Bollinger band squeeze
Sometimes Bollinger bands are used for breakout trading, taking into account Bollinger bands squeeze.
The logic of trading with Bollinger band squeeze is.
- When Bollinger bands squeeze, it means the market is quiet, and there will probably be a breakout after this condition ends.
- Traders will open new positions after the breakout wherever the price moves either up or down.
Popular indicator summary MACD
MACD is a multifunctional indicator.
- To detect the current trend through the zero lines, MACD above the zero line means a bullish trend, MACD below the zero line means a bearish trend.
- Measuring the strength of a trend through a histogram, the longer the histogram bar means the stronger trend, while the shorter the histogram bar means the weak trend.
- Determine overbought and oversold through the histogram bar, when the histogram bar reaches the highest level, it means that the price is in the resistance zone, and when the histogram reaches the lowest level, it means the price is in the support area.
- To determine signal entry is to use a cross between the fast moving average and slow-moving average, but there are other ways to use divergence between the MACD curve and the price curve.
Popular indicator summary PSAR
Parabolic SAR is an acronym for Stop And Reserve.
This indicator serves to determine when the trend starts, and when the trend will end.
How to use this indicator is very easy, and probably the easiest indicator compared to other indicators.
- When the uptrend will appear dot SAR that is below the price.
- When the downtrend will appear dot SAR is above the price.
- The sell signal is when three-dot SAR appears above the price.
- Buy signal is when three-dot SAR appears below the price.
- This indicator is best used in a market that is in a long term trend, or rally.
Popular indicator summary Stochastic
This indicator is a momentum indicator that is useful for determining the overbought and oversold areas.
How to trade using this indicator is also simple.
- When the price is above the 80 scales, it means the price entered the overbought area, and this is a Sell signal.
- When the price is below the 20 scales, it means the price entered the oversold area, and this is a Buy signal.
- This indicator gives a faster signal, and intraday traders use the H1 timeframe to reduce fake signals.
The RSI is also a momentum indicator, which serves to determine the overbought and oversold areas.
But besides that, the RSI indicator can also be used to determine a bullish or bearish trend.
- When the RSI is above the 70 scales, this means the price has entered the overbought area, so this gives a Sell signal.
- But when the RSI is below the 30 scales, it means the price has entered the oversold area, so this is a Buy signal.
- To determine bullish or bearish, add a scale of 50 to the chart
- When the RSI is above the 50 scales it means a bullish trend.
- Conversely, when the RSI is below the 50 scales, it means a bearish trend.
The ADX indicator has a function to measure the strength of a trend.
ADX has three lines, the first is the ADX line, the second + DI and the third-DI.
- The ADX line is not to determine the direction of the trend, but rather it measures the strength of the trend.
- ADX measurement uses a scale of 0-100 where the higher the ADX number the stronger the trend that occurs.
- When ADX shows the number 20, it means the trend is weak, whereas when ADX shows the number 50, this is considered a strong trend.
- ADX can be used to confirm whether the trend will continue or not.
- Besides this indicator can be used to determine the exit point, for example when the ADX value is below the number 50, traders can close positions early.
William% R is also a momentum indicator that is useful for determining overbought and oversold areas.
This indicator uses a negative scale from 0-100.
How to use this indicator is also almost the same as using stochastic, but because it uses a negative number, the condition becomes reversed.
- When the price is above the -20 scale, this means that the price is overbought, and this is a Sell signal.
- If the price is below the -80 scale, it means the price is in the oversold area, and this is a Buy signal.
- When prices are on a scale of -21 to -79, this is considered a neutral area
Ichimoku Kinko Hyo (IKH) is a complete indicator, can be used to measure future price momentum
And also to determine support and resistance, and to determine trading signals.
Ichimoku means “glance”, Kinko has means equilibrium, whereas Hyo is Japanese for “graph”.
So the overall Ichimoku Kinko Hyo stands for “a glance at the graph in equilibrium.”
- The Senkou Span A and Senkou Span B lines form clouds or Kumo.
- If the price is above Kumo, it is an uptrend, the upper line functions as the first support level while the lower line functions as the second support level.
- If the price is below Kumo, the price is a downtrend, the bottom line forms the first resistance level while the upper line is the second resistance level.
- Kijun Sen is an indication of future price movements. If the price is higher than the blue line of Kijun Sen, it is likely that the price will rise higher.
- If the price is below the blue line of Kijun-sen, the trend may continue to decline.
- Tenkan-Sen shows market trends. If the Tenkan-Sen red line moves up or down, this indicates that the market is trending.
- But if the red line of Tenkan-sen moves horizontally, it shows that the market condition is ranging.
- Chikou Span is a lagging line, it can be used as a trading signal, if the Chikou Span green line crosses prices from the bottom to up, it is a buy signal. If the Chikou Span green line crosses prices from the top to bottom, it is a sell signal.
All indicators have their own imperfections, nothing is perfect.
Therefore traders try to make combinations using several indicators to minimize fake signals.
The indicators that we have studied above are only a few types of indicators used by forex, crypto and CFD traders.
There are still many other indicators out there that have different looks and varied functions.
There are different types of dashboard indicators, currency strength meters, and so on.
All of them were created with the aim of helping traders to do the market analysis.