Characteristics of a Good Indicator in Forex Trading

Characteristics of a Good Indicator in Forex Trading

Knowledge and experience are two things that are closely related in the business / business world. The need for science such as theories related to your business is very important. Experience is also important because with experience you can train technical skills in doing business.

Trading is also like that, like a business / business in general, forex trading has theories that need to be understood for traders. Theories can be learned by reading books related to forex trading, understanding forex trading terms, and much more.

Practicing will also add to your experience, the more you practice, the more you understand how the world of trading works. In addition, you can also learn from the experiences of successful traders, how they become successful traders and the process.

In the world of trading there are a lot of determinant indicators as your reference for trading. For example the Moving Average (MA) indicator which looks at the average price movements at a time, the MACD indicator is used to see the average movement of the graph. Parabolic SAR indicator to find out the trend that will take place, the Bolinger Bands indicator is used to measure the range of price movements, the Awesome Oscillator indicator is used to see the direction of the trend and anticipate if the reversal, and many more kinds of indicators in forex trading.

Of course you have to choose one of the indicators that you think fits your trading strategy. But what if the indicator that you have chosen turns out not to bring you profit and even loss? How do I choose a good indicator?

Here are the characteristics of a good indicator in forex trading:

  1. Characteristics of a Good Indicator – Easy to Understand

Technical factors are one of the factors that you can use to support trading decisions. Technical factors are forex trading indicators that can be calculated using formulas. Where good technical indicators are indicators that in the calculation of the formula are clear and easy to understand, and easy to analyze the market symptoms that are happening.

After formulation, you can easily judge when the right time to open or close a trading position. That way the technical indicators will help you in making trading decisions.

  1. Characteristics of a Good Indicator – Not Complicated

the first indicator selection is to see the ease of understanding an indicator in the calculation of the formula and analyze the market in the form of trading signals.However, not all easy-to-understand indicators are simple. Sometimes the indicators at the beginning of the mathematical calculation are easy to understand ending in a complicated way to analyze the market.

A complicated indicator will lead you to confusion when analyzing trading signals on the forex market. So that your transaction decisions will be hampered, because you spend too much time analyzing the market.

The selection of the right indicators according to your strategy is difficult, because you will be faced with a variety of indicator choices. that’s a challenge for you as a forex trading business. So you need to recognize the characteristics of a good indicator before you determine what indicators fit your strategy.

First, you need to see if the indicator is easy to understand the mathematical calculation formula and easy to understand in analyzing the market. second, after you understand the mathematical calculation formula, then whether the indicator is complicated in the process of analyzing the market for trading signals.

After you feel that you feel easy to understand the indicator and you think that the indicator is not complicated in analyzing the market, then you have found an appropriate indicator. The strengths and weaknesses must be in an indicator, that is why you need your skills to utilize these weaknesses to become an advantage.

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