What is the most reliable forex indicator?

Well, in my trading career, I only use 4 of them. And trust me, these are pretty solid forex technical indicators. Please have a look:

• Average Directional Movment Index (ADX)

The ADX Indicator is a lagging Forex technical indicator designed to show the strength of a trend and is derived from two directional indicators: +DI and -DI.

The DI’s (Directional Movements) are a calculation of how a current day’s high’s, lows and closing prices are related to the previous day’s highs, lows and closing prices. The sum of these figures is then divided by the Average True Range (ATR).

In essence, the +DI tells us how strong the bull is today, compared to yesterday, while the -DI informs us as to how strong the bear is today, compared to yesterday. The ADX takes the values of +DI and -DI, and tells us who is stronger today, compared to yesterday - the bull or the bear.

• Moving Average Convergence/Divergence (MACD)

The MACD indicator is designed to reveal changes in the strength, direction, momentum and duration of a trend. THe indicator displays the relationship between two exponential moving averages (EMA), a 12-period EMA and 26-period EMA, by subtracting the latter from the former.

The indicator usually consists of:

1. The MACD line - which is the result of the above calculation
2. A 9-period EMA of the MACD line - which is known as the signal line and used to generate buy and sell signals
3. A histogram - which plots the distance between the MACD line and the signal line

• Relative Strength Index (RSI)

The Relative Strength Index (RSI) indicator is a very popular momentum indicator, which signals how much relative strength is left in the market move when the motion (momentum) may have become exhausted.

The RSI compares the closing prices of the current and previous candles for the up and down trends and then turns the outcome into an EMA (or in some cases an SMA) and then calculates how the uptrend EMArelates to the downtrend EMA, when oscillated on a scale of 1 to 100. The larger the difference between today and yesterday - the stronger the momentum.

• Stochastic Oscillator

The Stochastic Oscillator helps to identify overbought and oversold signals by measuring momentum. In the case of the Stochastic, it is done by comparing a particular closing price to a range of prices over a period of time.

In an uptrend, the price should be closing near the highs of the trading range, and during a downtrend, it should be near the lows. Like the RSI, the Stochastic is plotted between a 0 to 100 corridor. Typically speaking, readings above 80 are considered to be overbought, whilst readings below 20 are considered oversold.

Using these indicators, helps me pretty much get good results. Side by side, a reliable trading broker is also very helpful. That’s why I create an account on AssetsFX and enjoying their 0.0 spread facility. Their execution rate is super speedy.

So, overall my experience with these 4 technical indicators was too good. You can try them too.

Comment me what you experience!

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