4 Types Of Technical Indicator You Need When Trading Forex

If you have any experience in using any kind of charting packages to assist you with your forex trading, you will know that there are endless different technical indicators you can use. In this post, I'm going to be asking what are all these indicators and which ones do you really need?

As you can guess from the title of this article, there are essentially 4 different types of technical indicator and they are as follows.

1. Trend indicator.
MACD, Parabolic SAR and the various moving averages are a few examples of trend indicators and they can all be used to identify a trend. It's widely argued that you should only trade with the trend so all of these indicators will help you to take the decision out of your hands, and therefore dictate which way you should be trading. Your only decision now is at what level to enter the trade.

2. Momentum indicators.
These types of indicators are essentially oscillating indicators and are most useful for determining overbought and oversold positions and can be very useful in signalling the start of a new trend. Example include RSI, Stochastics and CCI.

3. Volume indicators.
As the name suggests, these types of indicators show the volume of trades behind a particular price movement which can be extremely beneficial because a price movement backed up by high volume is a much stronger signal than a price movement based on low volume. Example here include Chaikin Money Flow, Forex Index, Money Flow Index and Ease Of Movement.

4. Volatility indicators.
Volatility indicators generally use ranges to show the behaviour of the price and the volume behind any movements. this is useful because any dramatic change in behaviour can provide a good entry signal. Common examples include Bollonger Bands. Average True Range and Envelopes.

So there you have the 4 different types of technical indicators available to you. Which ones you use is entirely up to you, but it's generally advised that you have at least one type of each in order to provide additional confirmation for entering a trade.

Trading forex using technical analysis is all about probabilities in that when you enter a long position, for example, you want all of your chosen signal to be signaling an upward movement, therefore indicating a high probability of an upwards movement taking place.

If you use a strict stop loss policy and use these different types of indicators to confirm position, then over time this high probability trading method should provide you with more winners than losers in the long run.

Forex Trading Tips

First of all, I am sorry for not updating the blog. I am quite busy with my personal stuff. I read a small part about this forex trading tips in an e-book. It stress on "how to avoid typical pitfalls and start making money in your forex trading".

1. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
2 . Umambitious trading - Many new traders will place very tight orders in order to take very small profits. this is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have recover the difference between the bid and ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
3. No strategy - The aim of making money is not trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. without a strategy, you may become one of the 90% of new traders that lose their money.
4. Trade on the news - Most of the really big market moves occur around news time. trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
5. Don't act smart - The most successful traders keep their trading simple. They don't analyze all day or research historical trends and track web logs and their result are excellent.
6. Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.

Hope it will give you some inspiration. Just visit http://forexautopilot.com/
for more detail.

Basic Technical Analysis in Forex

Technical analysis is the methodology used by forex traders to predict or weigh up the odds of future price movements and market trends by studying past market price action. the premise of this analysis technique is patterns within the prices would reveal possible trends, highs and lows based on predictable repetitive human behaviour. People are predictable and have habits: history repeat itself. Also, the price action in achart reveals everything there is to know about that in strument since the current price action acounts foe all the market factors and sentiment, supply and demand.

There are a few sub-branches to technical analysis:
1. Oscillating indicator (RSI,Stochastics, MACD)
2. Number theory including the mathematical Fibonacci numbers and slightly mystical Gann numbers
3. Elliot Wave Theory
Gaps
4. Trends and Averages

It isn't necessary to use all of them at once. Perhaps the most commonly used are oscillators like RSI and MACD, Fibonacci numbers and Trends using Moving Averages.

Keep a Trading Diary

Keeping a detailed trading diary is what makes you grow as a trader. This is what allows you to learn from your experience. Good traders usually have great trading diaries while bad traders simply don’t care about them.
On your trading diary, you should annotate all your trades as well as describe all the reasons that made you take the trade. You should also annotate your pace of mind when you entered the trade and during the trade. Was there any economic release while you were holding a trade? If so, annotate it on your trading diary. The technical indicator that you were using gave you an exit signal, and you ignored it? Well, don’t be ashamed. Write it on your trading diary, and learn from your mistakes.
All traders make mistakes. The difference between winners and losers is that winners tend to learn from those mistakes. Losers prefer to forget about them…
If you want to be a winner, you’ll need to build a great trading diary and make it as much detailed as you can. You can even take some chart snapshots at the moment you entered and exited the trade and post them on your trading diary so that, in the future, you can see the reasons why you made your decision about a trade. In the future you can read your trading diary and learn about some mistakes that you made. This will allow you to correct these mistakes on your future trades.

Plan Your Strategy

Plan How You Will Trade.You need to decide how you would like to trade. Would you like to day trade? Would you like to swing trade? It all depends on your personality and on the time you have to trade. There’s no such thing as the best trading style. The best trading style is simply the one that best suits your personality. If your personality is more suitable for day trading, you probably won’t be a bright swing trader. If you prefer less stress and/or you don’t have the time to stay in front of your screen all day, you will probably be better swing trading.