Why have we been paying so much attention towards forex chart indicators?
Well, because it is important to know them all, as each and every one of them is a trading tool that is going to help us at some point. And, as I already mentioned, we can mix and match them in order to have more usage.
So, how and why do we use multiple indicators?
Well, the why is pretty simple – trading is difficult. And when we have a possibility to implement all of the available to us trading tools we need to do it. The fuller the spectrum of the information, the better our results may be.
Plus, as we already know, some of the indicators can show us a trend that is not really there and can lead us to the faulty result.
For example. Let’s look at how Bollinger Bonds can work together with stochastic indicators.
As we already know, these two indicators have a lot in common. For example, their form of representation is the same – the lines that move together, right? Well. Let’s imagine that the chart for the currency pair is going up and indicating a high resistance level.
In the same time the stochastic can indicate that the market is overbought and that the price is going to plummet soon. In this case both stochastic and Bollinger indicators are giving the clear signs about the further movements of the markets which gives us the perfect opportunity to short the couple.
If used right, this combination can help your trades to go to the level around 500 pips at once. And that is good number for a short trade.
Now, let’s look at SMA and MACD combination.
BOTH SMA and MACD can go up and down at the same trades. If their movements are the same on the same trades that is 100 percent guarantee that the decision that you make based on the signals, given out by the indicators is going to be a winning one.
In this combination you need to understand that the SMA is going to be faster than the MACD. But that is just the nature of some of the indicators: their programmed algorithm is faster than that of other indicators.
If used right, this combination can help your trades to go to the level around 500 pips at once. And that is good number for a short trade.
I have only grasped two examples here, but in reality you can use absolutely any combination of any of the indicators as you wish. That is up to every trader and only to them. There is no one who can tell you which indicators’ combination is going to be the best for you in which situation.
After all, all of them were created in order to be useful to the trader as a kind of a team.
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