By James Smith
When you are trading in the lower time frames it is important to know which indicators are going to deliver the best results. For most this might seem like a moot point in light of employing things such as support, resistance, Fibonacci levels, and pivot points, but there are indeed other things to consider. MACD and other indicators can be employed to determine which direction price action is likely to move in spite of other signals, such things are very important to use as a reference. Taking the time to learn how to use these indicators properly might seem a bit intimidating, but in the long term you will see the benefits of adding passive tools to your repertoire. There is a very real need to take advantage of these tools as a means with which to verify your suspicions.
Stochastics is another indicator that employs crossovers in conjunction with moving averages to produce a likely movement either up or down in the online forex exchange. Such changes while not assured do need to be taken into account where the overall picture is concerned, if you are unsure about price movement and its likelihood then it can be useful to employ another tool. Some other blunt level indicators such as RSI (relative strength index) will alert you as to whether or not a market is overbought or oversold, this is an especially useful indicator where mid-level market time frames are concerned. Using it in higher time frames such as the daily or weekly chart is ill advised and will likely result in losses.
Being able to know when to not add indicators is just as important as knowing when to add them, too many indicators can easily bog down your thinking process. Too many indicators can also slow down your reaction time to price movement, and when it comes to scalping this is unforgivable. So make sure that you have all of your ducks in a row before attempting to use a certain indicator, and before making any changes to your system you need to test it in your demo account first. Failing to test out a system prior to implementation can create some pretty nasty losses for those who do not look before they leap. No matter how minor a change you might think something is every indicator will contribute to your thought process, and this is never a slight change.
About the Author
The author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to stay up to date with the latest forex quotes
