2 Highly Effective Indicators You Can Use When Trading The Long-term Forex Charts
Currency trading can be profitable for both short-term and long-term traders. A large number of the short-term traders will almost inevitably blow up their trading account at some stage, whilst the more controlled long-term forex traders will often do a lot better. That's not always the case of course, but there are two technical indicators that can be invaluable to you if you do want to become a successful long-term trader.
The first indicator of these indicators that I want to discuss is the EMA(200) - or the 200 day exponential moving average in other words. This is a very popular indicator amongst long-term traders because it gives you an instant impression of the long-term trend when applied to a daily price chart.
This is important because it basically lets you know which direction you should be trading in. So for instance if the EMA(200) is rising then you should only be looking for long positions and if the EMA(200) is falling then you should obviously be thinking about opening short positions.
The second indicator worth using is the supertrend indicator. The majority of traders won't have heard of this particular indicator because it's not one of the more popular ones. However it is certainly one of the most effective, and I would recommend you download it to your charting software if you do not already have access to it.
This indicator will also tell you which way you should be trading in much the same way as the EMA(200). If the indicator is currently green, then the price is trending upwards and if it's red the price is currently trending downwards. So by looking at this indicator on both the current time frame and the longer time frames if you want additional confirmation of the trend, you can instantly find out whether you should be looking to open long or short positions.
If you apply both the EMA(200) and the supertrend indicator to the daily charts they should enable you to make sure that you are always on the right side of the trend, which will therefore help you to be a consistently profitable trader. Of course you will probably want to use additional indicators such as MACD, stochastics or short-term EMAs, for example, to pinpoint your exact entry and exit points.
However the point I want to make is that if you have aspirations to become a wealthy forex trader, I suggest you begin by using the two indicators that I've discussed in this article. Once you become familiar with them and are able to determine the trend straight away, you can then start creating a trading system that will help you generate maximum profits from trading this long-term trend.
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