Indicators are often considered the favourite trading tools for novice traders.
New traders often jump into the trading industry and start using a number of different kinds of indicators all at once. They think by using so many indicators they will get more accurate trading signals.
But the basic function of the indicators is not to give you definite trade setups. It only tells you about the quality of the traders. So there is no need to use more than one indicators to filter out the best trade.
In fact, many successful traders in the United Kingdom often ignore the readings from the indicators. If you can trade the key support and resistance level, you can easily make money without the help of indicators.
However, we can still improve our winning edge by using indicators in an efficient way. Let’s now learn the perfect way to use the indicators to increase our profit factors
Know your indicator type
There are two basic types of indicators. The first type of indicator is known as the leading indicator and it’s mostly used by the short time frame traders.
The leading indicator always prints real time trading signals in your trading platform. When you use the leading indicators you need to tweak the value of the indicators settings. The default settings will not always give your precise readings.
But how to know which settings will work best for you. This is really very simple. You need to use the demo accounts.
The demo account is one of the best ways to test a number of different new systems. But when you go for the demo accounts you need to make sure you are trading with a class broker like Saxo.
The low-class broker will always give you delayed price feeds, therefore you will never know the true price movement within the market.
The second type of indicators is known as lagging indicators. This is widely used by the long-term traders. When you are trading CFDs you can easily find the dynamic support and resistance level of the market by using the 100 and 200 SMA.
The professional scalpers use the dynamic support and resistance level to set their pending orders. It allows them to make a huge profit within a very short period of the time.
On the contrary, the conservative traders use price action confirmation signal to trade these levels. Some retail traders often use the 55 EMA to trade the live market.
But when you use the lagging indicators you need to switch back to the higher time frame. In the lower time frame, you will have to deal with many false setups.
Its true higher time frame trading can be extremely boring but if you can find a way to control these emotions and stay on the sideline until you get a clear trade setup, this should lead to better results.
Consider them as helpful tools
Never take any trading decision based on the indicators readings. The indicators will never help you find the perfect trade.
But if you can use them in an organised way it will help you to find the best trades, as the pro traders always use it as their trade filter tool.
Being a currency trader you should never buy expensive indicators. If you do some research you will always find the required indicator for free.
You need to act smart to become a successful trader in the retail trading industry!
Develop a simple strategy
Try to develop a simple trading strategy by using demo accounts, and use one of two indicators so that you can assess the quality of your trade.
Without back testing your trading system you should never trade the live market. Those who don’t have any idea about the trading industry should seek help from expert UK traders.
Remember never trade this market without knowing the risk factors. If you do so, you are going to lose money like the other 95% of traders.