Tuesday, September 2, 2014

Forex Stochastic and ADX Indicator FAQ

May 8, 2012 by  
Filed under Forex FAQ


In today forex faq, we have a question from one of our fellow subscribers asking me about the stochastic and ADX indicator.

Below is the question:

Hello

As I am new to forex relatively. I am writing to inquire which is best to apply the 5 min or 15 min chart for the stochastic with the ADX indicators

Thanks

Personally I will prefer to use the 15 minutes chart as this time frame has lesser noise as compared to the 5 minutes chart. In addition, the ADX indicator is a good tool for trend identifying and if you manages to identify the trend on the higher time frame, this will give you a better picture of the market.

Therefore if you ask me to compare between the 5 minutes and 15 minutes chart, I will use the ADX indicator on the 15 minutes. As for the stochastic indicator, this is an oscillator and it works well in all time frame.

In fact, there are several ways you can trade with the forex ADX indicator and I have written an article on this indicator some time back to show you exactly how I use it. You can read it below,

ADX Indicator Explained

Maybe let me share with you a little bit more about these 2 indicators. You will use the ADX indicator to identify the strength of the market first.

Let says that you find that the current market condition is UP using the ADX, then you will wait for the stochastic indicator to show sign of oversold when the market start to retrace.

The best will be adding a Fibonacci retracement level. When you see the price hitting a major Fibonacci support level together with the stochastic showing that the market is oversold, you will enter enter a LONG trade to ride the trend.

I hope that I have provided you with a good answer and do feel free to give your comment below.

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