The Best Forex Trading Indicator - A Must Try Strategy

Most Forex traders would agree that currency trading can be very difficult at times and earning consistent winnings are hard to come by for most. As a result, I have attempted to provide an easy to follow but extremely useful Forex trading strategy. The Relative Strength indicator (RSI) is a very helpful tool in the Forex trader's arsenal. This oscillator is usually used on the basis of 14-day, 9-day and 25-days. Let's take a look at the best way to use the RSI and how this forex trading indicator can make you consistent winnings.

With regards to the Forex market, the Relative Strength Indicator shows the forex market activity in terms of if it is over bought or over sold. The RSI provides the Forex trader with an indication in terms of the direction the Forex market is moving. One of the great advantages of this indicator is that it is a leading indicator and as a result this indicator shows forex traders what the market is going to do, allowing traders to act accordingly.

It is important to remember that the greater the RSI number, the greater resulting over bought market there is. Of course the opposite is true: The smalle4 the RSI number, the more over sold it is.

So how does this really help us on the Forex market? It is an exceptional tool when looking for micro reversals as well as macro reversals in the Forex market.

Here is a really helpful tip: Try applying the Relative Strength Indicator on the one minute chart with an eighteen period. This should give you a real nice entry signal and you can also apply this to a five minute chart as well. remember that the most critical numbers as far as entry is concerned are twenty-five and seventy-five.

What is the Best Forex Trading Indicator?

This is a question that many Forex traders have wondered for a long time. It seems that there are as many opinions and answers as there are Forex indicators. My intent is not to give you and outright answer but review my two favorite Forex indicators and what they can do to improve your profit margin.

Support/Resistance Indicators

One of my personal favorite Forex indicators is the Support and Resistance Indicator. Technically speaking, these Forex indicators have to do with the levels of price on charts that serve as a barrier to the price in that direction. To break that down let me give an example. If there was resistance for a certain currency and that price went beyond the resistance level it would be said that the resistance for that price was broken and the result would be a spike in the price. Of course, support is when the price breaks below a barrier and tumbles.

Trend Indicators

Trend indicators are a great tool in the hands of a Forex trader. These indicators show the amount of price movement in a specific direction over a period of time. This indicator is one of the oldest and most reliable indicators. As they say on the market, "The trend is your friend." A trend indicator will help you see the direction that the currency or market is moving in. There are times when you have a hunch and trade against the trend but this is usually a loser's game. Trade in the direction of the trend and watch your winnings become consistent.