What is The Best Indicator to Give Entry Signal to a Trader
In today forex faq, we have one question below from one of our fellow trader
Below is the question:
Hi Kelvin, can you recommend me 1 fx indicator that can help me to enter winning trades.
The above is in fact a commonly asked question among my readers as I have at least received such questions for more than 50 times and therefore I will like to write this post to answer this question
Since you guys are here on my blog, I will be very frank with every one of you. There is no way a trader can make money simply from trading the signal of one indicator.
The key here is not the indicator. Even if you have the best 5 indicators, you might still be unable to make money from trading.
An indicator is just a part of a strategy, there are more details within a strategy than the signal produced by the indicators.
Below are the other factors you need to consider for a valid entry of trade
1) Support and Resistance – There are various S&R levels that you need to consider when looking for an entry.
You need to look out for valid trendline break, major pivot and fib levels which may affects the price movement.
Sometime, you will see that your indicators give you a SELL signal but if you do not identify the existence of a strong support, you will find that the trade will end up as a losing trade as the price is unable to break through that strong support.
Therefore trading is not as simple as just waiting for an entry signal from your indicator.
You need to have a combination of different factors to get a good strategy. If you are a student of my Fx Street Uni course, you will know that my strategy comes with a pre trade setup check to help me identify a trading opportunity as well as a false alarm filter systemt to reduce the number of losses due to indicator false alarm.
2) Validity of Trades – To further improve your winning percentage, you will need to have a way to validate your trade so that you can reduce the number of losing trades due to false alarm.
3) Overall Trend of Currency – Before you enter any trade, I will suggest that you trade in the direction of the trend as it will be easier to hit your target profit.
Even experience trader sometimes have problem trading against the trend, therefore I will advice all of you guys to only enter trade in the direction of the trend to increase your chance of winning.
I have written several blog posts on identifying trend of a currency pair and you guys can go and read them to find out more about trend identifying skills.
I hope that I have answered this question. Do feel free to email me whenever you have any question.