Recognizing positive trends in any market is difficult and in the forex market,
getting in or out too late could mean your entire bankroll. You do not have to
be the best of the best in order to make a profit, but you do need to get in at
a low enough point and get out at a high enough point to make a profit. If you
do not recognize the right forex trading signals, you will wind up getting
buried and be out of the game before you ever even got your feet wet.
In this forex training on trend following forex indicators, we will start with
using crossover techniques that are specifically aimed and recognizing new
trends that are developing. Some of the more popular are using the MACD and
moving averages.
If you are looking for an example, when the EMA (5) crosses with the EMA (20),
you have the crossing of a long term trend with a short term trend that is
showing a direction of profitability. You can use the same principles when
looking at the MACD crossover and over time, you will learn to pick up these
trends earlier and earlier leading to more opportunities for profit.
At this writing, a perfect example of this occurred. During the market today,
the 4 hours chart of the GPB/USD pairing had the TRIX (15,9) moving dramatically
upwards. At one point, it had actually gone up 100 points. This is a prime
example of a great money making opportunity in a forex market.
Two other popular trend following free forex indicators are the ADX and
Supertrend.
The Supertrend model was developed specifically for spotting trends in the forex
market and is extremely effective. That should be apparent by the name! The ADX
is also very popular and has led to spotting very profitable situations over the
years. Noticing a crossing at the 17-23 level (we use 20) is a great indication
of situation that you will want to look at. Noticing where it is crossing on the
DI- and DI+ line will allow you to figure out if you should purchase or get out
if you are already involved in an investment.
Learning at least one trend indicator is a necessity, but learning multiple ones
can only lead to good things. Like anything else, if you have more than one
successful way to read a situation, you can look for a time when all of these
forex signals that the time is right to get in or out of your forex investment.
If you have conflicting information, you know you should stay away and wait for
a better opportunity to risk your money.
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Written By Daniel Su, Expert Author and Founder of
ForexTradingPower.com
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