4 types of indicators FX traders must know

Many forex traders spend their time looking for that perfect moment to enter the markets or a telltale sign that screams

It is a tool, use it as such. Note that the signals can occur at any time. This shows you how many traders are long on a currency pair buyers and how many traders are short on a currency pair sellers. As displayed in Figure 4, the red line measures today's closing price divided by the closing price 28 trading days ago.

The Forex Market Sentiment

If you have been searching around for the best forex indicator then your search officially ends here! Stop wasting your time trying the same old recycled forex indicators that tell you the exact same thing just in a different way.

The theory here is that the trend is favorable when the day moving average is above the day average and unfavorable when the day is below the day. As the chart shows, this combination does a good job of identifying the major trend of the market — at least most of the time. However, no matter what moving-average combination you choose to use, there will be whipsaws. The advantage of this combination is that it will react more quickly to changes in price trends than the previous pair.

Many investors will proclaim a particular combination to be the best, but the reality is, there is no "best" moving average combination. In the end, forex traders will benefit most by deciding what combination or combinations fits best with their time frames.

From there, the trend — as shown by these indicators — should be used to tell traders if they should trade long or trade short; it should not be relied on to time entries and exits. For additional information, check out " Forex: Now we have a trend-following tool to tell us whether the major trend of a given currency pair is up or down. But how reliable is that indicator? As mentioned earlier, trend-following tools are prone to being whipsawed.

So it would be nice to have a way to gauge whether the current trend-following indicator is correct or not. For this, we will employ a trend-confirmation tool. Much like a trend-following tool, a trend-confirmation tool may or may not be intended to generate specific buy and sell signals.

Instead, we are looking to see if the trend-following tool and the trend-confirmation tool agree. In essence, if both the trend-following tool and the trend-confirmation tool are bullish , then a trader can more confidently consider taking a long trade in the currency pair in question.

Likewise, if both are bearish , then the trader can focus on finding an opportunity to sell short the pair in question. One of the most popular — and useful — trend confirmation tools is known as the moving average convergence divergence MACD. This indicator first measures the difference between two exponentially smoothed moving averages.

This difference is then smoothed and compared to a moving average of its own. When the current smoothed average is above its own moving average, then the histogram at the bottom of Figure 3 is positive and an uptrend is confirmed.

On the flip side, when the current smoothed average is below its moving average, then the histogram at the bottom of Figure 3 is negative and a downtrend is confirmed.

In essence, when the trend-following moving average combination is bearish short-term average below long-term average and the MACD histogram is negative, then we have a confirmed downtrend.

When both are positive, then we have a confirmed uptrend. At the bottom of Figure 4 we see another trend-confirmation tool that might be considered in addition to or in place of MACD. It is the rate of change indicator ROC. As displayed in Figure 4, the red line measures today's closing price divided by the closing price 28 trading days ago.

The blue line represents a day moving average of the daily ROC readings. Here, if the red line is above the blue line, then the ROC is confirming an uptrend. If the red line is below the blue line, then we have a confirmed downtrend.

After opting to follow the direction of the major trend, a trader must decide whether he or she is more comfortable jumping in as soon as a clear trend is established or after a pullback occurs. In other words, if the trend is determined to be bullish, the choice becomes whether to buy into strength or buy into weakness.

If you decide to get in as quickly as possible, you can consider entering a trade as soon as an uptrend or downtrend is confirmed. On the other hand, you could wait for a pullback within the larger overall primary trend in the hope that this offers a lower risk opportunity.

There are many indicators that can fit this bill. However, one that is useful from a trading standpoint is the three-day relative strength index , or three-day RSI for short. If you close MT4 and restart it, will those arrows still be there? Will Forex Reversal work on my broker? Absolutely, as long as you're running the Metatrader 4 Platform. Can I receive alerts on my iPhone or Android smartphone? How many signals will I get with the Forex Reversal?

Whilst this might not seem like a lot, and whilst we can't guarantee the frequency of trades or when they'll appear, it's important to note that it is the quality of the signals that's the most important factor. Some weeks might give more signals, other weeks might not give any. There are already lots of other indicators out there offering dozens of arrows a day, but they just end up with a lot of false signals.

With the very strict criteria implemented into Forex Reversal, it means you receive extremely high probability alerts which is actually what is essential. Note that the signals can occur at any time. Patience is required, and this will be rewarded with powerful signals, to which you can apply your own technical analysis.

What is the success rate of the indicator? The entries are of consistently high quality, the trader simply needs to apply the exit method of their personal choice. Hence, the entry arrows, combined with decent technical analysis, will provide you with the reliability that traders worldwide have been seeking. Note however, we wouldn't recommend trading this powerful indicator with the forex news, remember, no indicator is perfect, yet with the Forex Reversal, the good trades outweigh the losing trades.

I have lots of different brokers, can I use this on all of them? It is a lifetime license, with no recurring costs. Additionally, if you wish to change brokers, you can do so at any time, not a problem. Exactly which currency pairs does the Forex Reversal support? The indicator only works for Forex trading, with forex brokers running MT4. It's not designed for anything else, such as commodities, stock or shares, or binary options the latter is purely gambling anyway.

How about future updates to the software? Once our software is upgraded, you shall be notified within the application itself, with a link to the new update. It is imperative that you upgrade, since previous versions are not supported. Again, to re-iterate, this is on the condition that you have forward tested the software for at least 6 months whether in demo or live. Whilst six months may seem like a long time to test, it's imperative, because the indicator does not produce many signals, so it will naturally take a longer time to be in a position to pass judgement.

We're giving you the opportunity to download the manual, so you can see how to actually use the indicator, should you wish to purchase it. After great endeavour, introducing the amazing: Years of hard work have gone into producing what we believe is the best arrow based forex indicator , which we are making available to the public for the first time; please don't jeopardise this for the rest by engaging in any cracking activities.

Your copy of the software shall be emailed to you within a few hours after purchase, along with installation and registration instructions. Each license is for one broker account, and is a lifetime license.

You can of course change brokers, whenever you wish, simply let us know. It is a tool, use it as such. Past results are not a proof of future results. Note that the indicator is designed only for the M1 timeframe. We also advise traders to demo our software for the first few months.