Forex indicators. Guiding star or mirage?
The fact that with the help of these tools, necessary for any trader, one can determine the trend direction and find entry and exit points to open-close positions, says about the undeniable usefulness of indicators. Skilled programmers have used mathematical calculations to simulate the historical data of price indicators, including the volumes at different time intervals. Kudos to them for that. In fact, 20 years ago, traders were deprived of such, it would seem, integral parts of any modern trading terminal, as the Forex indicators.
Nowadays the development of your own trading system is inseparably connected with the use of necessary, preferably diverse, indicators. Expert Advisors and mechanical systems, some of which can really show wonders of automated trading, are based on their work.
Even derivative algorithms have appeared. Thus, price and volume indicators that take into account price and volume prove their worth. You can read more about them in the article "Forex Price Volume Trend Indicator".
By and large, modern indicators can be divided into two groups - trend indicators and oscillators. Actually, using oscillators as easy to determine the direction of the current trading trend, but most of all, they are indispensable when working in a flat. All the rest - different variations of the subgroups with the use of some additional parameters, convenient for this or that Forex trading system.
At the same time, some traders are trying to turn these useful and necessary tools into some sort of trading oracle. Encircling the charts with various indicators, which often are poorly coordinated with each other or duplicate the readings, they stop to see the tendency of the trading instrument price movement. Such a trader is more like a pilot flying an aeroplane in the dark and having to rely solely on the instrument readings. But this is possible only for experienced pilots.
Conflicting readings of unbalanced for a particular trading system indicators give equally inconsistent Forex trading signals. At best, such a trader just does not open a position, waiting for confirmation of his decisions from all of the indicators. In the worst case such trader acts intuitively and it leads to losses, which are often global. Although, the most important thing for Forex trading is of course the price.
Even the best Forex indicators are just indicators of history. Perfectly tracking the happened facts, they help trader to make a decision in the future on the basis of historical actions. But, indicators will never predict the price behavior in the future. It is not by chance that professional traders often completely refuse to use analytical tools in their trading systems. Most of all they focus on price behavior on crossing certain price levels or on other indicators, in some way or another, related exclusively to the current behavior of the price. In fact, the main argument in Forex has always been and will always be the price of a trading instrument.
Of course, the complete rejection of the indicators is a voluntary and requires sufficient experience, so - everything is good in moderation. Especially, there are many years of proven trading system solutions using a set of indicators developed specifically for this trading system. The most important thing is for a trader to use the information provided by these trading "devices" properly in order to make the only correct conclusion and take the right decision based on its knowledge and experience. And so it is from day to day, from month to month.