Hi,
I have a reversal indicator that shows every reversal but that gives me only about 50-60% winning rate. Do you know any confirmation indicators that would tell me how to avoid false reversals? Thanks!
All indicators show you what has already happened, they cant show what is going to happen.
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Sometimes they can indicate intention but often in context.
Right now on Eur/Usd MACD is indicating a reversal, but it’s Friday evening, and another oscillator indicator based on US 10yr, which often agrees with the MACD is saying that likely more EUR buying up ahead.
So maybe find something that acts as confirmation or not.
This is the essence of indicators, and in fact price charts. After you’ve seen what HAS happened, what MIGHT happen is down to a range of % probabilities. And this is where the trader’s own experience comes to bear far more effectively than any off-chart indicator.
But you have to anticipate what will probably NOT happen, but MIGHT - this is where your stop-loss comes in. And also what COULD happen - you enter long after a minor swing low and before you know it, you’ve got a firm uptrend which is being supported by a flow of good news. This is where your trend-following plan comes in, with pyramiding etc. Be prepared.
Actually indicators are here to show you the scenario of the market. But to predict the market it won’t help you properly. By seeing the current scenario you can guess what might going to happen. Somehow you might understand the market intention. You need something else as your solution. Indicator is not your solution. You can use the combination of indicators and charts to see what is happening and what might going to happen.
No indicator can predict fake reversal. This is where human intelligence is superior. You have to understand it by using different technical and fundamental tools. Indicators show what already happened. It doesn’t tell us what is going to happen.
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