Tuesday, November 25, 2014

Reliable Buy and Sell Indicators

July 14, 2010 by  
Filed under Fx Indicator


Getting in and out of a trading position at the right time can make a big difference in a trader’s account. However this is not a simple task but it can be done with the help of several buy and sell indicators.

There are a wide variety of indicators available in our trading platform but not all of them are able to generate reliable buy and sell signals for us to trade. In this post, I will be sharing with you some of the buy and sell indicators that I find quite reliable and useful for myself.

Below are the buy and sell indicators that I often used:

1) Forex MACD Indicator: I have written several posts on the power of MACD and here I am going to share with you how I make use of MACD to time my entry and exit of my trading position.

The MACD is a good tool to verify a breakout or trend line break and all you need is to make use of the histogram in it. Whenever you have a setup that prompts you to enter a SHORT trade, you should wait for the MACD histogram to flip below the water line. This is to prevent fake out actions that is pretty common in trading and thus increase your winning percentage.

MACD Histogram Flip

Similarly, you can exit your position when you see the MACD histogram flipping to the opposite side of your position.

2) Parabolic SAR: For this indicator, you can make use of the dot that is formed either above or below the candlestick to enter or exit your trades. When you are looking to go SHORT, you can wait for the dot to be formed above the candlestick. When you are looking to go LONG, you can wait for the dot to be formed below the candlestick.

Go Long

As for your exit strategy, you can exit your position when the dot flips to the opposite side of your trade.

Go Short

3) Forex CCI Indicator: If I am looking to go LONG, I will wait for the CCI to move to the 100 level and then enter my position. If I am looking to go SHORT, I will wait for it to move to the -100 level before entering a trade.

Forex CCI Indicator

As for the exit, you simply have to take note of the opposite situation to occur before exiting your position.

Although the above buy and sell indicators are pretty reliable, I do not enter my trade simply based on one indicator alone. I will usually wait for a confluence of events to occur before I enter any trade.

Confluence of Events

Personally, I will wait for the signal on the MACD, CCI and Parabolic SAR indicators to be showing the same signal before entering any position as this will usually give me better winning probability. Just a reminder to you, please do not rush into using these indicators to your trade until you have tried them out on your demo account.

If you are still struggling in your trading and is looking for a forex strategy that can make you money consistently. You can take a look at the course below.

Forex Street University Course

I have recorded a video for you to have a better understanding of how to make use of these buy and sell indicators

 

Comments

43 Responses to “Reliable Buy and Sell Indicators”
  1. Corrie Uys says:

    I am using the cTRADER platform. I cannot find the CCI indicator to download for the c TRADER. Where can I find it ????
    If there is no CCI for the cTRADER can I use the RSI Indicator instead or would the Stochastic-CCI for the cTRADER be OK

    Thanks for an Excellent BLOG

    Awaiting you reply

    • Kelvin says:

      Hi Corrie

      I am using the FXCM trade station for all my charting. You can download the trade station by creating a practice account with them.

  2. Sharique says:

    Asalam-oAlaikum, Kevin,

    You’re doing a great job, your blog’s simplicity and clearance of techniques you are sharing from your experience is outstanding. God rewarded you and I pray He will further reward you.

    Amazing blog!

  3. Richard says:

    Hi Kelvin,
    Wow! So glad to discover you blog. You made forex trading simple and easy to understand!!Thank you so much for sharing generously!!
    Regards,
    Richard

  4. Dhananjay B says:

    Hey thanks i have read many blog and web site since 2 years but i found your information very useful :) :)

  5. gentatski says:

    thanks kelvin

  6. JOHN says:

    You are on the right track. However there will be times where all the signs are pointing in the same direction and you still get stopped out. The key is probability and the probability that you are right is higher when all the indicators are pointing in the same direction

  7. KB says:

    Hello, great information here. Just one question which time frame are these signals most probable on? or works the best?

    • Kelvin says:

      Hi KB

      The information here in this blog can work on all currency pairs and all time frame. Personally I am using the 15 minutes as I find that it has lesser noise.

  8. Nik says:

    Hi Kelvin,
    As far as I understand you entry when candle closed and cci has ALREADY finished above 100/under -100/,but not in the moment of crossing 100/-100/ level. Is this right?
    Thank you and best regards,
    Nik
    BG

  9. Jacob O. Ojo says:

    Hi Kelvin,
    I have read and heard of Pending order, but I don’t know how this is useful in the entering and exiting a trade. I don’t even know how to use it. As a newbie in this business, please explain to me.
    Thanks.

    • Kelvin says:

      Hi Jacob

      For pending order, you are not entering at the market price, you are actually setting a price for your trade to be trigger.

      You will usually use it when you see a point of strong resistance or support and you intend to enter at that level. You will then set your pending order at the price of that level and wait for the price to hit it so that your trade is being triggered.

  10. Angela says:

    Dear Kelvin,

    Thankyou so much for sharing your trading strategies and advice to newbies on our level.

    Would a strategy using the MACD, CCI 14, PSAR and 34 EMA work on a 4hr timframe, when all indicatos are aligned?
    When would you actually enter? At the candle close? Or wait for a retrace to the 34 EMA.
    How would this strategy and the entry be handled differently for a breakout, reversal or pullback trade?

    Thanks again Angela

    • Kelvin says:

      Hi Angela

      I bet you are trying to buy when the candle crosses above the 34 EMA with the alignment of all your indicators or sell when the candle crosses below the 34 EMA. As I personally did not trade this strategy, I may not be able to give you the advice based on experience but I will try to tell you based on my trading knowledge instead.

      If you ask me about the entry, I will wait for the candle that has broke the 34 EMA to close and enter on the next candle. This is because the candle that has broken the EMA may retrace back before it closes and this will not be a crossover. If the candle has closed too far away from the 34 EMA, I will wait for it to retrace before I enter. If the candle closes near to the 34 EMA, I will enter right away when all the indicators has aligned.

      One thing that you should be worry about is the fakeout which is the fake breakout of the 34 EMA and then the price moved back again. I hope that I have answered your question.

  11. Prashant says:

    hey Kelvin,

    i read ur article today and today itself i applied it to my trading and covered 25 pips till now and still holding. Till now i had no trading plan and was planning to quit forex trading due to losses, but thanks to you. Its because of u now i have a trading plan and m happy to follow it.
    Once again thank you very much………

    • Kelvin says:

      Hi Prashant

      That was great!

      Forex trading is like any business, you have to persevere and learn and practice. Do note that forex is not a get rich quick scheme and it is a genuine business. Once you have learned the trade, you will have a money making skill for a lifetime.

  12. iman says:

    Hi,
    I should say in this market you are very generous to share your valuable experiences with traders, God bless you.
    Iman

  13. Ashraf says:

    Hello Kelvin,
    Thanks for the useful info. In the CCI indicator I notice that you suggest enter (LONG) at 100. Isn’t it a bit late? Why not enter at 0 ?

  14. Ashraf says:

    Hi Kelvin,
    Thanks a lot for the useful info. I am very very new to forex. Referring to CCI indicator, I notice that you suggest to enter position(to go LONG), you will wait for the CCI to move to the 100 level and then enter. If you are looking to go SHORT, you will wait for it to move to the -100 level before entering a trade. Isn’t that a bit too late to enter. Why not enter during the 0 level?

    • Kelvin says:

      Hi Ashraf

      The reason why I did not chose to enter a position at the 0 level because there is no momentum in the movement. When the CCI reaches the +100 level, it is a sign of upward momentum and therefore I will look to go LONG and when CCI moves to -100 level, it is a sign of downward momentum and I will look to go SHORT.

  15. Daniel says:

    Hi Kelvin,
    Thanks for sharing your information.. ^^

  16. Stephen says:

    Hi,

    Please, how long does any custom leading indicator last? Can any change in the market affect custom leading indicators effectiveness? If the market can change their effectiveness/performances what is your advice. Thanks

    • Kelvin says:

      Hi Stephen

      I am unable to tell you exactly how long the custom leading indicator last. However do note that the price action is the most important factor of the whole market and therefore the performance of all indicators is never perfect as there are definitely time where they are unable to capture the market movement.

      My only advice for you is to make use of several indicators as they are able to increase your chance of getting a good trade but as usual, it is not possible to have a 100% winning trade as losing is part of the game.

  17. Bourse says:

    Thanks Kelvin for this useful informations you shared with us. I am trying to find out what is the best Forex indication. Cheers

    • Kelvin says:

      There is no such thing as the best indicator as it all boils down to your trading strategy. Some indicators work well in breakout strategy and fail completely when you use it to scalp. So you need to decide on your trading strategy and then pick the indicators that works for that strategy.

  18. Rockdrop says:

    I was pondering on this article of your Kelvin. When I checked my Charts somehow all 3 are saying for me to go BUY :D

    1H charts says a possible trend reversal
    15 Min MACD shows a flip to the up trend formation
    15 Min CCI is over 100 level
    15 Parabolic SAR shows the Buy dots already.

    Am I using the indicators right? :D

    Still need to see some positive pips though xD

    • Rockdrop says:

      So far pip profit is now 40+ pips :D I’m happy trading forex for a change! Many thanks to you buddy!

    • Kelvin says:

      Hi rock drop

      You are on the right track. However there will be times where all the signs are pointing in the same direction and you still get stopped out. The key is probability and the probability that you are right is higher when all the indicators are pointing in the same direction.

      Good work

  19. arumugam says:

    hello sir, what timeframe sir

    • Kelvin says:

      Hi arumugan

      These indicators are applicable to any time frame. You just use them in the time frame you usually trade with.

  20. Dan says:

    I really appreaciate your simple formula, Pls what is the best or your time frame for this system. Thanks.

    • Kelvin says:

      Hi Dan

      There is no best time frame in trading. It all depends on your preference and your trading style. The time frame that suits me may not be suitable for your style of trading.

  21. A-soltani says:

    Hi Kelvin,

    Thanks for sharing your information .which timeframe do you use as bigger for trend / pattern base and which for timing / entering position ?
    also are the setting of your indicators the same for both timeframes ?

    Best regards,

    A- SOLTANI

    IRAN

    • Kelvin says:

      Hi A- Soltani

      For trend analysis, I will usually do it over the hourly chart and when it comes to pattern recognition, I will always use my 15 minutes chart and when it comes to entering of position, I will move down to the 5 minutes chart to look for best entry opportunity. As for the setting of the indicators, they are all the same which is the default setting by my platform.

  22. Kelvin says:

    Hi Ed

    The settings that I used are all default setting on my trading platform. Below are the settings for your reference.

    MACD Setting:
    Short EMA 8
    Long EMA 24
    Signal Line 10

    CCI Indicator Setting:
    Number of Periods 14

    PSAR Indicator Setting:
    Step 0.02
    Max 0.2

  23. Ed says:

    Hi Kelvin,

    Thanks for sharing your information again. I really like your style. For confirmation on entry or exit: do you use standard settings with the indicators?

    Best regards,
    Ed
    The Netherlands.

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