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The Seven Best Forex Indicators - All Yours!

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The Seven Best

Forex Indicators -All yours!

Dear new Forex trader, Everything we do in life, we do for a reason. Why have you taken time out of your day to read this report? Or let‟s turn this around and ask… Why have I taken the time and commitment to write a free report to you? Well, either way we‟re doing it to better ourselves in some way. On your side, I want you to make a second income trading the Forex market. And on my side, I want to make sure that you achieve your life long dreams.

Too long we‟ve been tied down to a boss. Too long we‟ve struggled through month after month. Too long, we‟ve done things on their terms.

Now it‟s our turn…

My name is Timon Rossolimos, head of trading at FSPInvest.co.za. 12 years ago, a generous gentleman introduced me to the profitable world of trading. And since that day, it‟s been a tremendous passion of mine to learn how to trade and trade for a better financial life for me and my family. And now I want to introduce the Forex market to you too. In this FREE report, I‟m going to break down the seven best Forex indicators I‟ve ever come across… Indicators like:

How to „predict' the Forex market's next move using the stochastic oscillator

How to spot a cup and handle pattern and profit Use these two Forex indicators to know when to buy and sell for profit

Grab a coffee, rest your feet, and enjoy the read.


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Indicator #1:

How to „predict' the Forex market's

next move using the stochastic

oscillator

Knowing when a currency pair price hits an extreme is very useful. It usually indicates

a change is ahead.

You can use different types of oscillators to show you when this happens. One of these

oscillators is the stochastic oscillator.

So how does it work?

Let's take a closer look…

How the stochastic oscillator works

A stochastic oscillator works on the premise that: • When the price of a currency pair is peaking, the closing prices tend to approach their

daily highs; and • When the price of a currency pair is bottoming, the closing prices tend to approach

their daily lows.

The stochastic oscillator gives you lines plotted on a scale of 1 to 100. A currency pair

is overbought when it hits 80 and over, and oversold when it hits 20 and under.

You can also use the stochastic oscillator for indications of when a reversal is on the cards:

• Bullish reversal: When the line hits 10 or below; and • Bearish reversal: When the line hits 90 or above.

Have a look at the stochastic oscillator below the price chart…


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Reading Forex indicators from a stochastic oscillator

Making up the stochastic oscillator are two lines:

• %K: This is the solid line on the chart above and is the plotted instrument. • %D: This is the dotted line on the chart above and is the moving average.

The way these two lines interact generates further Forex indicators.

If the %K line crosses the %D line, this tells you the immediate trend is changing.

If the %K line cross the %D line from the bottom up, this is a bullish signal. And if the %K line crosses the %D from the top down, this is a bearish signal.


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Indicator #2:

How to spot a cup and handle pattern and profit

Using technical analysis as your trading strategy can be extremely useful. By identifying

patterns forming on charts, you can get an indication of what lies ahead for the price of an asset.

One very useful pattern is a cup and handle. If you spot one of these forming on a

share, there's a good chance the price of an asset is going to soar.

So what are the identifying features of a cup and handle pattern? And how can you use this pattern when you trade?

What is a cup and handle pattern?

A cup and handle pattern is a bullish continuation pattern. This type of pattern forms

during an upward trend and is an indication that the upward trend is going to continue.

William O‟Neil introduced this pattern in 1988.

There are two parts to this pattern, the cup and the handle.

The features of a cup and handle pattern

Have a look at the chart below showing a cup and handle pattern‟s anatomy.

Here‟s the anatomy of the cup and handle pattern


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The main features of a cup and handle pattern are…

An established trend

As the cup and handle pattern is a continuation pattern, the price of an asset must be in a strong upwards trend before the cup forms. If this isn‟t the case, you can‟t use this

pattern.

You‟re looking for an uptrend that‟s at least a few months old.

The depth of the cup The cup is a U shape that forms on the chart and appears quite bowl like.

The depth of the cup can be different. Ideally the depth should be about one third of

the previous price advance, but it differs. Sometimes the depth of the cup is up to two-

thirds of the previous price advance.

The cup‟s handle The handle forms on the right side of the cup after the high. It usually happens after a

short pullback in the price of the asset.

Following this period of consolidation is usually the resumption of the upward trend, when the price of the assets breaks through the handle. This tends to become a new

support level.

Cup patterns tend to form between one and six months. The handle, usually one to four weeks.


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If you spot a cup and handle pattern, you can put a long trade on as the upward trend should resume, a great profit making opportunity.

Indicator #3:

How to spot profitable short Forex

trades by using this pattern

If you're looking for a useful and potential profitable chart pattern, the head and

shoulders pattern is just that.

It can help you spot when an upward trend is about to change to a downward trend.

This means you know when it's time to exit a long Forex trade. And it shows you that it could be time to put on a short Forex trade.

So how does the head and shoulders pattern work? And how can you use it to find short

profitable trades?

Using the head and shoulders pattern as part of your Forex trading

This is how a head and shoulders pattern forms…

After a sustained upwards trend, the price of a currency pair hit resistance. The price

then pulls back. This forms the left shoulder.

The price then pushes higher to hit a peak. This forms the head.

The price then falls back, tries to rally but fails and continues to drop. This forms the right shoulder.

You can draw in a line between the two lows of the head formation to give you the

neckline.

This is what it looks like on a chart, Frank Hemsley in Profit Watch explains.


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If the price breaks through the neckline, in other words the support level, after the right

shoulder, this signals that a bigger move downwards is on the cards.

How to work out your take profit from a head and shoulders pattern

To work out how far the currency pair price will fall, you can use the distance between

the top of the head and the neckline. The price should fall the same distance down

below the neckline.

You can use this level for your take profit.

Head and shoulders patterns are reasonably simple. They can appear a lot in Forex

pairs and tend to be quite reliable.

The head and shoulders pattern has the added benefit of helping you mark out a take

profit level.

Once you see a head and shoulders pattern forming, it‟s just a matter of time to see

what happens. If the price breaks through the neckline, it‟s time to put on a short

trade.


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Indicator #4:

This “easy-to-spot” Forex pattern

will decrease your trading stress and

perfect your market timing!

Do you have trades setups that turn against you? Do some trades take out your stop loss and only then move in the direction that you wanted them to go? Do your losses

heap up and add to your stress levels?

Well, imagine you take a trade and it immediately starts moving in the direction that you want it to go. You'll start making profits instantaneously!

To do this you need to time your trades perfectly! I've spotted two trades lining up with easy-to-spot patterns you can use in the future again!

Today I'll show you how to recognize these patterns…

The GBP/USD lining up to give you 430 pips with a rising wedge

When you look at the chart above you see that price action created a rising wedge.

Now, these types of charts are reversal patterns.

So, we can expect price to move back down to the base of the pattern. That price level is 1.500.

If you look at where price broke down out of the wedge, it moved back up, tested the

wedge line. Here the wedge acted as a resistance level and price started moving


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down again. That‟s our entry into the trade.

This is the best time for you to enter the trade. If the wedge pattern move does what

we expect, you won‟t get better timing on your trade.

Big winners, small losses and great gains

Another great thing about this particular trade is the risk to reward ratio that you‟ll

achieve. Now, to be successful in the long run you should be looking to always use a

risk to reward ratio of at least 1:2. This will assure that your winners are always

bigger than your losers.

And you will be profitable even if you have more losers than winners. In fact, you‟ll

need only 33% winners to stay profitable with a risk to reward ratio of 1:2.

But, with this trade we are achieving a risk to reward of 1:7. We are risking 54 pips to

gains 430!

That‟s what makes these trading patterns so good to use. You have a good

opportunity to time your trade perfectly. If the trade doesn‟t work out, you‟ll only lose

54 pips.

You can profit just as much in a falling market

If you see the same pattern, but upside down, then you‟ll be able to use the

opportunity to look for long (buy) opportunities. These patterns work just as well in

the opposite direction.

So use these patterns to time your trades better. You‟ll have better risk to reward

ratios. And, with your increased profits you‟ll definitely have less stress trading!


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Indicator #5:

Use these two Forex indicators to

know when to buy and sell for profit

Oscillators can be very useful to identify when the price path of a currency pair is

changing.

You can use them to check if a currency pair is overbought or oversold. And you can use them to identify when it's time to enter and exit trades.

These two oscillators are the moving average convergence divergence (MACD) and

the relative strength index (RSI).

Let's take a closer look at each of them…

Forex indicator #1: Moving Average Convergence Divergence (MACD)

The basis of this Forex indicator is exponentially smoothed moving averages. The

MACD has two exponential moving averages plotted against a zero line.

You can see how the MACD looks on the chart below…

The zero line shows when the values of the two moving averages are the same and

crossover.

The MACD also gives off signals when the shorter moving average crosses the longer

moving average line.


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The MACD generates a buying signal when there‟s an upward crossover and

generates a selling signal when there‟s a downward crossover.

For trading Forex, the default setting for the MACD work well. They generate accurate

buy and sell signals.

These are:

The fast exponential moving average: 12;

The slow exponential moving average: 26; and

The signal line: 9 slow moving average.

Forex indicator #2: Relative strength index (RSI)

This popular Forex indicator looks at the changes between the higher and lower

closing prices.

The RSI uses a scale of between 0 and 100. You can see how this looks on the chart

below…

The RSI in action!

When the RSI line hits over 70 this is a warning signal that the currency pair is

overbought. When the RSI line hits under 30, this is a warning signal that the

currency pair is oversold.


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The RSI generates a selling signal when the line goes above 85 and generates a

buying signal when the line goes below 15.

When using RSI, set it at nine periods for the most accurate signals.

So there you have it. How to use these two Forex indicators to know when to buy and

sell for profit.

Indicator #6:

Work out what's going on in the Forex

market with these three charts

To see what's going on in the Forex market, there are three charts you should use.

So what are these charts? And what do they show you?

Let's take a closer look…

Three ways to read the Forex market

Chart #1: Use the line chart to check the major trend in the Forex market

A daily line chart is great for looking at the major trend in the Forex market. Instead of showing you the price activity for the period you select, it shows a single price for

the period.

For example, you could plot the opening price of a currency pair, its closing price or the average daily price.


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Chart #2: The bar chart shows the currency range

Bar charts are very useful as they show you the currency range for your chosen

period. They shows you the high and low prices, the opening price and the closing price.

You can use bar charts over any time period. So you can use them over the short-

term, for example using a 1-minute period, or for the long-term, for example using a monthly period.

Chart #3: The candlestick chart, the pros choice


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Professional Forex traders opt for the candlestick chart and so do many retail Forex traders too. This is because the candlestick chart is very easy to decipher and to use

with technical analysis.

The candlestick chart contains the same information as the bar chart: The high, the low, the opening price and the closing price.

Making up the candlestick is the opening and closing prices. So this shows you the

price range for your selected period. The wicks coming out the top and the bottom of the candlestick show the highs and lows for the period.

Indicator #7:

Minimise your losses when trading

Forex with this one simple indicator

I've devised a rule over the years, which can cut your number of losing trades to a

bare minimum. And all you need is the Candlesticks indicator which is your price chart.

I'm very excited to tell you about this rule, because I know, it will bring a new level of

success to your Forex trading:

This rule will cut your losing Forex trades drastically

This is the crème de la crème to help handle your losing trades and curb your

emotions when trading.

Imagine your trade is in a profit but still has to go higher to reach your take profit level.

It looks promising to be another one of your winning trades.

Next thing you know, the damn thing turns around and goes against you.

But you can stop this trade from making a loss, by using this one rule.

The Break-Even rule using the Candlesticks indicator


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To explain it easily, let‟s use the currency pair USD-CHF (US dollar to the Swiss

frank).

Say you buy the currency pair at 0.9310 and you put your take profit at 0.9340 and your stop loss level at 0.9290.

This means you‟ll be willing to risk 20 pips (0.9310 – 0.9290) in this currency trade.

The next chart will show you what happens next with the break-even rule.

Here‟s how the break-even rule will change your life forever!

So now, all you do is simply add the 20 pips to the entry price (0.9310 + 0.0020)

giving you 0.9330.

If the price hits this level, this will be your signal to move your stop loss to break even.

So let‟s sum it all up.


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You first go long (buy) at 0.9310 and set your 1st stop loss initially at 0.9290 and

your take profit at 0.9340.

The difference between your entry and stop loss is 20 pips (0.9310 – 0.9290).

And so you take your entry level 0.9310 and simply add 20 pips. This will give you the currency price level of 0.9330.

Once this price hits this level, it will be your signal to raise your stop loss to the break

even mark at 0.9310.

With this rule, you can cut your losses, which will make your Forex trading a more

easier and stress-free way of going about it.

Now you have the seven best Forex indicators, you‟re equipped to start trading the Forex world.

And so click here if you‟re ready for the next step!

Always remember,

“Wisdom yields Wealth”

Timon Rossolimos

Managing Editor: Trading Tips Head Analyst: Red Hot Storm Trader

Author: 94 Top Trading Lessons of All Time

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