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Top 5 Best Forex Indicator Ever

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Top 5 Best Forex Indicator Ever
Top 5 Best Forex Indicator Ever

A professional trader before making any trade always looks at fundamental news and uses the best forex indicator to hit a good profit. Basically, the Forex indicator is a mathematical calculation that helps to develop an investment strategy for a good profit. We discuss the top 5 best indicators ever, but keep in mind, Indicators cannot assure 100% success. They only help traders to identify trends, price momentum, and market pivot points.

It’s a myth of forex trading that past patterns of the market are likely to repeat themselves in similar circumstances. That’s why professional traders always look at the recent past history of any pair. Similarly, almost all indicators record data of past patterns and predict market trends on that calculation.  A good strategy and risk management scheme is a surety of positive trade.

See also: Is Forex Trading Legal (Halal or Haram) in Islam?

professional traders looking for the perfect moment to enter the market and indicators play an important role to identify entry and exit points of the market. Here we discuss the top 5 best indicators ever that help you in scalping and long-term trading.

  • Moving Average
  • Relative Strength Index (RSI)
  • Bollinger Bands
  • Moving average convergence/divergence or MACD
  • Pivot Point

Moving Average:

The moving average is one of the best forex Indicators and frequently used indicators in forex trading, it’s applied on a specific time frame average. As we discussed above that the market repeats its past pattern in similar circumstances. That’s why the statics of moving average is totally based on average to predict market trends and momentum.

Moving average is categorized into two groups:

  • Simple moving average (SMA)
  • Exponential Moving average (EMA)

Here we discuss all aspects of moving average to put up a beginner to expert level.

How to insert a moving average indicator in the chart: open Meta trader 4 (MT4) and look in the navigator box, open the indicator tab and select trend, and scroll moving average, a moving average Manu will open(see Picture).

How to insert Moving Average

 

Select your required “period”, “method”, “apply to” and “Style”.

“Before selecting a period and method have a look at moving average road map”

Bars (candlesticks) Method Used for
5 bars (candlesticks) Exponential It shows Strong momentum
10 bars (candlesticks) Exponential It shows a short-term trend
20 bars (candlesticks) Exponential It shows support / Resistance
50 bars (candlesticks) Exponential It shows an uptrend defense line
100 bars (candlesticks) Simple It shows a big move
200 Bars (candlesticks) Simple It shows the last candle in the current trend

Experts use multi-moving average indicators. Usually, experts use 20EMA in a 1hr time frame chart to fine support/Resistance with 50EMA for strong support/Resistance, 200SMA is used with 50EMA in the H4 time frame to find market pivot point and 5EMA is used with 10EMA and 50EMA for scalping.

Moving Average 100Moving Average 200

 

Relative Strength Index (RSI):

RSI is another highly used indicator to find the sell and buy points of any pair in the market. It graduates 0 to 100 points. Readings below 30 normally indicate that the stock market is oversold, and the market will turn to a bullish trend from this point while readings above 70 indicate that it is overbought and the market will turn to a bearish trend from this point. Whereas market-moving near 50 shows a market correction period. In extra care circumstances, you can change 70 and 30 reading points to 80 and 20.

How to insert an RSI indicator in the chart: open Meta trader 4 (MT4) and look in the navigator box, open the indicator tab and select oscillator, and scroll Relative Strength Index (RSI), an RSI Manu will open(see Picture).

How to insert Relative Strength Index (RSI)

 

Select 14 periods and apply close position to get the best results.

Bollinger Bands:

Bollinger Bands is a trend indicator with a unique formulaic method invented by John Bollinger in the 1980s that shows the prices and volatility. Its upper line indicates market resistance and the lower line shows support whereas the center line shows an up or downtrend. if the market moves above the centerline then it invites the trader to buy the pair and if the market moves below the centerline is an invitation to sell. Usually, traders use RSI and MACD with Bollinger bands to confirm the market trend, because sometimes a single indicator shows a false trend.

Bollinger Bands

 

How to insert a Bollinger Bands indicator in the chart: open Meta trader 4 (MT4) and look in the navigator box, open the indicator tab and select trend, and scroll Bollinger Bands, a Bollinger Bands Manu will open, just ok with the default setting.

Moving average convergence/divergence or MACD:

MACD is another oscillator indicator. Actually, it’s a combination of slow-moving average and fast-moving average that show market trend change with the cross of the MACD line over the signal line, and the histogram is the market’s potential. No custom settings are required, default settings are best for good results. When the MACD line is above the signal line market remains in a bullish trend and when the MACD line is below the signal line it shows a market sell trend. Usually, this indicator is used with other trend and oscillator indicators to verify the used indicator parameters.

MACD

 

How to insert a MACD indicator in the chart: open Meta trader 4 (MT4) and look in the navigator box, open the indicator tab, select oscillator, and scroll MACD. A MACD Manu will open, just ok with the default setting.

Pivot Point:

A pivot point is used to identify market trend-changing points, basically, these are the point where markets face strong support/resistance several times. For example, Gold (XAUUSD) faces resistance in 1833, whenever the market hit 1833 a strong resistance push the market in a sell trend, so 1833 is known as a strong pivot point of the market. The same goes with the pivot point indicator that records all past patterns and shows the pivot point of the market with that statics.

Pivot Point

“Pivot point indicator is not MT4 or MT5 by default indicator”

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