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Forex Currency Trading System: Indicators To Use

By: Bret Freak From reviewing a number of forex currency trading systems and methodologies available online, I have found that the majority are based on having a number of indicators pointing in the same direction giving you a what’s known as a ‘confluence’ of indicators which is much more likely to be an accurate signal.

However, it is not just any combination of technical/fundamental indicators. The well thought out systems available on the internet makes use of different types of indicators. For example they might first decide to observe some type of resistance level such as a fibonacci retracement level, a pivot point, or a double bottom. This provides the initial support area. From here they may look to price action, for example they may decide that their system requires a certain candlestick formation to occurm such as an evening star, or morning star formation. Alternatively, they may just wait for any candlestick reversal signal to occur around that area, to take the trade.

Some traders would be happy to take the trade with just those two criteria. Others may require additional indication that a change in trend is about to occur. For example, they may use a bearish Stochastic, or MACD signal to confirm the change in trend.

Another less used method of trading might be, to incorporate the use of support and resistance type indicators as mentioned above, they may decide to make use of cycles. I wont go too far into the subject of trading using cycles since it would go off topic, and my aim here is to introduce you to the possibilities, and what other traders are using in there forex trading systems. However, one method of cyclic analysis comes to mind, it’s called the Delta Phenomenon.

The Delta Phenomenon can tell you with great accuracy, WHEN in time a move is about to occur, as well as the DIRECTION. However, to increase your probabilities of being correct you should refer to the Elliott Wave Principle. The Wave Principle basically can give you the FORM of the wave, as well as the ability to predict its DIRECTION. So if you had indications from both the Elliott Wave Principle and Delta that a change in trend to the upside was about to occur, wouldn't you feel more confident in taking the trade? Of all the methods and systems I have reviewed and examined, I have never come across a methodology that made sense as much as the method I have briefly described above involving the use of both Delta and the Wave Principle.

Of course it is essential that you keep in mind other factors such as money management, and expectancy when developing and implementing your own forex trading system.

Conclusion

There is literally an endless mix of technical analysis techniques that you could use in your forex currency trading system. The one you choose largely depends on what you are comfortable with. Some prefer not to use market timing techniques that take some time to learn and implement, however if you have the time and patience to learn analysis techniques such as the Elliott Wave Principle, and the Delta Phenomenon, it might just be the ticket to your success.

Article Source: http://www.lifeweightloss.com

Trading-forex-online.com offers educational articles on some of the most widely and not so widely used forms of technical analysis available to trade the forex market. As well as providing forex currency trading system reviews & information, to help you choose a trading system that suits you.

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