The way to make money trading in the forex market is to get in and out of a trading position at the right time. Timing this properly is the key to ending each day in the red or the black.
Sounds simple, right? Pick the right time to get in and get out and make a lot of money.
Unfortunately choosing reliable forex indicators isn't quite so simple. Some trading indicators available online can produce reliable signals indicating a good time to buy or sell, while other trading indicators are just a quicker route to premature losses.
Combine Forex Indicator Sets
The first step in choosing reliable currency trading indicators is to make sure that you use ones from different categories. In general there are 5 basic categories of forex trading indicators:
1. Trend 2. Momentum 3. Cycle 4. Volatility 5. Volume
Forex trading indicators on which you can rely will be ones across the various categories. This will make sure you are analyzing the same data through different indicators and getting the same result (duplication). Learn these indicators and know what each one measures and how to read them. When you have a better idea of what are the best forex indicators for you to use.
Avoid Duplication (avoid same set indicators)
Currency trading indicators are only as good as the other ones chosen. What does this mean, exactly?
This means that you shouldn't use several forex indicators from the momentum or cycle categories, because chances are good that they're providing you with the exact same information. If you choose too many trading indicators from the same category, you won't be getting a full picture of the forex market.
The best way to avoid duplication with your currency indicators is to see it for yourself. Set up several from the same category—you choose—and look at the patterns. If the patterns are similar then those indicators are analyzing identical data and where you believe you have confirmation, you really just have the same data twice.
Popular Forex Trading Indicators
So, how do you choose the right forex trading indicators? Well you can start by looking at the most popular ones.
The 3 most popular currency trading indicators are; moving averages, stochastic indicator and MACD. If you've done any research, you're probably familiar with the MACD indicator, which is a good place to start when researching.
The popular ones will be the easiest to research because there is such a wealth of information about them. Find Free Forex Indicators
Before you start forking over tons of cash for reliable trading indicators, do your homework and find a few. Keep in mind that many of the free ones may not be very useful or may duplicate information received from ones.
Because these indicators are free doesn't mean that they're unreliable. In fact many websites offer the most popular ones for free. Use this as a way to familiarize yourself with trading indicators before you choose the best for your trading strategy.
Many traders would have you believe that choosing reliable forex trading indicators is the most difficult thing you'll ever encounter. The truth is that a little elbow grease in the form of research and this will be just another part of the forex trading learning curve!
Andrew Daigle is the owner and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies