4 critical factors you must know about the indicators

Indicators are the most powerful tools to find false trade signals. Many novice traders blindly believe in the indicator reading and take their trades. But as you learn more about this market, you will start thinking about whether the indicators are the most powerful tools to find false trade setups. You will slowly learn to use the multiple time frame analysis and use fewer indicators in your trading profess.

Eventually, you will stop overloading your charts with too many tools and rely on few technical indicators to find the best trade signals.

As a new trader, you might many critical factors about the use of indicators. Today, we are going to discuss the top 4 critical factors which you must know about the indicator. So, without any delay let’s get into the details

Repainting vs no repainting

Some of you might have heard these terms for the very first time in your life. Repainting indicators are that indicator which changes its value even after showing a specific data. For instance, you have spotted a buy signal on a certain indicator but all of a sudden the signal has changed. These are our repainting indicators and it is very hard to use. Usually, professional scalpers use such indicators. On the contrary, the non-repainting indicators are much more accurate but it gives late signals to the retail traders. Such indicators are most used by the position traders in the market.

Changing the values

Every indicator comes with a default value. Visit this link and get the professional demo account from Saxo and start learning the functions of the indicator. While doing so, you will see the value of the indicator is based on the ideal market condition. Usually, you should not have any problem in using such indicators as they are optimized to trade the major and minor currency pairs. But to improve your accuracy, you should be altering the values of the indicators. For instance, think about the simple moving average. Very few traders use the default period settings in the indicators. Most people set the value to 100 or 200 as it gives a much more accurate reading when it comes to identifying the support and resistance level. So, you need to learn to change the defaults in the indicators to get the best results.

Indicators are helping tools

You should never consider the indicator as to your prime trading tool. Your prime trading tools can be the trend line or the support and resistance level. But if you consider the indicators reading as the financial confirmation signals to take the trades, you are not going to have a pleasant time in the trading industry. You need to find the potential trade signals based on the supply and demand zone. After that, you need to assess the highs and lows of the market and ensure that you are taking the trades with the trend. Once you are done assessing the major variables, you may use the indicator readings to determine whether the trade signal is valid or not. So, use it as a trade filter tool only.

Using too many indicators

Thousands of traders believe that using too many indicators can help them to become a successful traders within a short time. But if this was true, everyone would have been making tons of money in the retail trading industry. You need to use few indicators during the analysis process. Depending too much on the indicators reading is going to mess things up. Instead of relying on the indicators reading blindly focuses on the other variables. If possible learn to use the trend line tools along with the Fibonacci retracement tools. Once you become good at that, use the indicator reading to check the quality of the trade setup. But remember, using more than two indicators is not a great idea to trade the Forex market.

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