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The role of indicators in the Forex market
Written by: PaxForex analytics dept - Friday, 27 June 2014 0 comments
Regardless of a size of your Forex deposit, you should not forget about the most important thing, namely the analysis of the behavior of a currency pair. After all, the final result of your trading will depend on how well it is made.
However, it should be noted that if you have problems with trading psychology and money management rules, you can fail even with the correct prediction. Nevertheless, you should always strive to make your Forex broker rates forecast as good as you can.
One of the elements of a trading system towards better results can be an indicator. This is a software product with a prescribed algorithm that produces certain calculations and relevant results.
Typically, the indicator is set in the program Metatrader or another, through which trade takes place and the result of its calculations reflects directly on the currency chart in the form of various lines and other geometric shapes. Basically, the best Forex indicators can significantly improve the outcome of trade, at least in the right hands. But many of them have their flaws.
First, the most important feature of the indicator is that he can’t trade on its own. For this purpose there are special mechanical trading
systems. Indicator is always plays only a supporting role. With automated trading, as in the manual, it can become an assistant; on the basis of its performance can be based a trading system.
Second, the lack of indicators is that they are quite outdated quickly. After all, the Forex market is changing and the nature of currency pairs constantly acquires new features instead of the old ones. Therefore, many of the indicators over time can alter their performance and often not in favor of the trader.
Usually, the most effective are the new Forex indicators that have appeared recently and their creators were professional foreign exchange market participants. The fact is that Forex masters are constantly developing new approaches for analyzing the behavior of currency pairs and some of them automate their ideas, implementing them into indicators.
But, unfortunately, if they are effective, they either do not show to anyone or at best sell for a decent amount, hundreds and thousands of dollars, depending on the efficiency of such an indicator.
As soon as the indicator stops working properly, they start spreading it for less money or even for free and beginners usually got just such obsolete and unusable items. Although, if handled adroitly, some of them can be altered and bring to trade.