The Best Indicator to Use as A Forex Trader
In this video:
00:23 – Indicators and the best one to use
01:20 – The problem with traders and indicators
01:56 – What works for you?
02:23 – Starting with a blank chart and look at the price
04:00 – Use horizontal lines
04:40 – Send me your trading questions
What is the best indicator you can use as a Forex trader? Let's talk about that and more right now.
Hey Forex traders, it's Andrew Mitchem here at The Forex Trading Coach with video and podcast number 337.
Indicators and the best one to use
And I want to explain all about indicators and more importantly, which is the very, very best indicator that you can use to be a profitable Forex trader. So let's talk about that. There's a lot of information here.
And it all stems back to when we start trading. And when we start trading, and I did exactly the same, you put your charts up, you find a trading platform, let's say MT4, it was MT3 when I started, or it may have been two. And you put the indicators on and you just get completely mesmerised by them. I was, I was completely mesmerised by how powerful these indicators were, how amazing they were. It's like nothing I'd ever seen before.
And all I needed to do was follow this line and when that one crossed over that and it reached this certain level, then if I just followed those and did nothing else, then there was nothing sure that I was going to be a multi, multimillionaire from my trading really quickly. Absolutely guaranteed.
The problem with traders and indicators
You're thinking there's a catch and of course there's a cash. The problem is that doesn't happen and like I said, I'm just saying that I've been through this as well.
So if you're in that position right now, believe me, I know exactly what you're thinking because these indicators do look really cool. The problem is is that none of them really work by themselves and that becomes the problem. There is no one indicator that is the magic pill. Sorry to say it, but it's true. You cannot find any indicator. They've all got some merits to some degree, but by themselves they're all completely useless, the whole lot of them.
What works for you?
And so you have to work out something that works for you because most people will then go and think that they can alter the parameters of an indicator or make it more reactive or slightly slower. Or they'll have some magical formula of all these combinations of indicators that's suddenly going to tell them this magic secret answer when to enter and exit a trade that no one else has ever discovered before. And again, if you've been doing this for a while you know exactly what I mean, because I know you would have done the same yourself.
Starting with a blank chart and look at the price
So bring all that back to what changed things around for me. And it was when I actually got rid of all the indicators of my charts and I actually started to look at the price. You see the problem is, is when you have all these indicators together, everybody ignores the price on the right hand side column of your charts. How often do you actually look at what the price of a currency is? It's probably hardly at all. It's probably never for some people. And that becomes the danger.
So what I did is I eliminated all the indicators. I looked at the price and I looked at where the price was moving. I then started to study candles. But also when it comes to indicators, yes I do use them but for me indicators are generally horizontal level lines because a horizontal line is the same for everybody. It's there set, when a price has hit a certain level or it's bounced at a round number or it's hit the pivot point or something like that for the day, then that's a level that everybody can use. And I don't have to be kind of like subjective by it because it's an actual level. And that's where I find, you know, those are the kinds of indicators that really are the best because then it's about discovering well what part of the chart is the candle in right now?
Now you still need to understand candles and to be honest, they are probably some of the very best indicators you can get because they're actual what's happening right now. They don't sort of manufacture themselves based on what happened hours and hours or weeks ago. Like most other indicators that all move beautifully, but they lag.
Use horizontal lines
So understanding horizontal levels, understanding price action, understanding candles, probably three together are the very best indicators that you can use. My honest opinion is that most indicators out there, you should probably not use on your charts. They will just confuse you, they will cause analysis paralysis.
Bring it back to basics and bring it back to what the professionals traders do. They look at what's actually happening in the market. They look at strength and weakness, they look at all those type of things. Put those things together that will give you a higher probability chance of being a very, very good profitable Forex trader.
So I hope that helps. Once again, this is Andrew Mitchem, the owner at The Forex Trading Coach.
Send me your trading questions
Anything else you need like questions like this you'd like me to answer for you in future videos and podcasts, just drop me an email, [email protected] Thanks again and I'll see you next week.