What are the best 3 indicators?

[q827]

I'd like to learn about DMI as well. Where can i get more info?

[smiley33]

Forexzen,

I chose the DMi (in conjunction with Momentum and ADXR smoothing) as it appears to work well on the pairs I follow.

Yes it can give wrong signals , and fuond that GBP/JPY is the best example of when it fails to work well.

Also I found that the time of your charts is crucial.

I trade the EURUSD,USDCHF,GBPUSD ,GBPCHF . For these ths signals are quite reliable I found.

I look at the 4HR and Dailies to look at general trend. Superimpose these to the 1HR chart, and base my trading entry on the 10 and 30min chart. Adding a momentum indicator (n=14) is the confirmation I need to place the trade.

I use it cause it works for me, and has removed the emotions associated with holding a position. this together with my non greedy approach seems to work fine.

What pairs did you use it on? What software are you using for your charts?

I know that different packages are not identical in chart output, so suspect that that can be a good reason.

Anyways, my tupence worth, there are a lot of folks that could put me right in my place

[smiley33]

Originally Posted by q827

I'd like to learn about DMI as well. Where can i get more info?

I went as far as buying the book, but you will not have to.

Do a google or [enter favourite search engine] for ADX or DMI/ADX and you should find a plethora of stuff out there (bog bad web ) .

One I would recommend is www.investopedia.com - just liked their article.

Its interesing, but took a while to get in my head but that's me....

[faizy999]

Investopedia is great for stock trading but it has less coverage of the forex any other good resource where we can learn about using indicators Now i know what indicator is used to do what.
But how is my problem any one lead me??

[forexzen]

Smiley,

Sounds interesting. I'll have to take another look at the DMI. I also use higher time frames like the daily and like to trade off the 4 Hour chart. I'll trade any pair if it looks like a good setup.

[smiley33]

Originally Posted by faizy999

Investopedia is great for stock trading but it has less coverage of the forex any other good resource where we can learn about using indicators Now i know what indicator is used to do what.
But how is my problem any one lead me??

Faizy - I do not advicate using investopedia to 'learn' fx - they do however have a good explanation on the DMI (looked at esignals and thought it was muich poorer).

faizy, I was wondering the exact same thing, and decided to do some homework.
Moneytec is GREAT in terms of resources, and nothing beats a good book.

With TA we look at concepts moving prices (Wilder's wrote his trading / backtesting wheat and silver) - once you grasp the concept , looking at the charts becomes much easier.

Happy trading,

s33

[smiley33]

forexzen,

the way it has worked for me:
smaller timeframe = lesser pipage between crosses

AN example on the EURUSD if trading the crosses would be:
1HR Chart yields an average of 100 pips per DMi +- cross
Daily yields 1000 pips per cross...


Cheers,
s33

[Medran]

Originally Posted by CajunFX

Hello All,

I am new to Forex (might explain what I am doing here) and in my readings to date I keep hearing the message "don't over anylize the market". The other message I keep getting is that a successful trader uses just 2 or 3 indicators. So my question here is...

If you could only use 3 indicators, what 3 would you use and why?

I am still learning and many things in life you cannot learn from books so all feedback is appreciated.

Regards,

CajunFX

Dear CajunFX

The most important thing about indicators is to understand exactly what it is they are telling you. But to answer your question...

No.1: Moving Averages. This encompasses MACD as well and many volatility derivatives. MA's tell you a lot. They tell you the trend and the volatility of the market. Plot at least three, short, medium and long term. When they start to cross each other you can tell a lot about the state of the market and if you measure their gradient and convergence/divergence you can get an idea of the rate of change of market sentiment. Great for entries and of limited use for take-profit. Remember there's lots of ways to calcuate these, Open, high, Low, O+H+L/3... etc and that there's at least two ways to calculate an EMA.

No. 2: Elliott Waves. This also encompasses most breakout-type indicators. Elliott waves start to become more important as you trade shorter time frames. They let you identify collapses in market confidence whether bull or bear and are invaluable for both take-profit and stop loss. Good for take profit and stop loss, not so good for entries.

No. 3: ATR. The big one for stop losses and of secondary interest for breakout entires (though I would never use them for such). Surely one of the best stop loss indicators of all though.

... If I had to go No 4 I'd get into the channels, simple MA/offset and Bollonger/Donchian etc. The key to swing trading, one of the most consistengly profitable strategies.

Hope this helps.

Have fun


Medran