Hi
Im new to forex been on a demo account trading im looking at trading the GBP/USD as this is the most popular what is the best indicator to use ive read that bollinger bands are the best for forex and what strategy would be a good one
Bollinger Bands are more complicated than some indicator-assisted approaches and day-trading is more difficult than long-term trading, so I suspect you’re setting yourself up for a hard battle ahead.
My advice is start swimming from the shallow end. Why not go for a simpler strategy over longer term using daily charts? For example using 2 MA’s, focusing on their sequence, or 3 MA’s where you also check the slope of the slowest?
Hi
Thank you for your email
what would be the best set up then on what you have said to us and what setting on the moving average would you use
There isn’t a universal best or right setting. Its like the accelerator on the car, if you want a lot of signals per week you use faster MA’s, if you want one signal per year you use slower MA’s. But each selected MA needs to be at least 2 or 3 times longer than the next faster. You can use them to generate entry signals in the form of a MA/MA crossover or can use a price/MA crossover or you can use MA slope as a directional filter or use MA sequence on the screen as a set-up, taking entry signals from price action. These are all simple strategies - which is good - and their respective chart appearances are objective - an MA is either above another or below it, its slope is either upwards or downwards, so there is little room for subjective novice failures of judgement - which is also good.
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Hi @Jag51,
This thread will be of help… .includes indicators and how to apply them to an MA Strategy…
No guessing will be required… Read the entire thread so you understand that only ONE colored slope moving average is all that is required…
Hi
So what you are saying is if i put a 20sma and a 50sma on my chart and wait for the 20sma to cross over the 50sma this wil show either a sell or buy position i know it can either be support or resistance
So if i put a 20sma and a 50sma on my chart and wait for the slower one to cross over the faster one this will show a up trend and if it goes the other way it will show a down trend
That’s an approach. The MA’s are slow so only going to produce infrequent MA/MA crossover signals: also many of these signals will have missed a good early part of the trend and may actually be generated near the trend’s failure. But they can be powerful - have a look at AUD/USD, which gave a 20/50EMA crossover in early March - its still going.
Another approach is to watch the slope of the 50. When it changes direction, this can be useful. This usually occurs earlier than the 20 crosses it. See the AUD/USD where the 50EMA peaked first in early February and again later that month.
Another is to note the downward slope of the 50 and then see when price crosses down through the 20 or tests and is rejected by the 20, which happened numerous times almost every month since February. This offers multiple places to re-enter or add to a position.
Of course, reversal traders will say but the MA is too slow because price formed a high in late January. This is true, but reversal traders shouldn’t be looking at MA’s, they’re nothing to do with their game. If you’ve decided to be a trend-follower, then you’ve already decided not to trade until the trend is confirmed, so you take a lower risk for accepting potentially lower returns per signal. But you can always increase returns by pyramiding, and within a confirmed trend is the only place to do that.
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Tommor
To be honest im not sure which way to go yet im siting on the fence between scalping and day trading and i do appreciate your time in answering my emails and the advice you are giving me
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Tommor
how about if i change the MAs to 10 and 20
Don’t day-trade or scalp. Unless you’re already a fantastic trader.
No problem, its just like the accelerator on the car, you will get far more set-ups from faster MA combinations, potentially more than you can possibly take. And don’t forget when you’re back-testing and studying signals an set-ups and how reliable they are, its still a signal/set-up whether you take it or you don’t take it.
One thing I would add is that if you take a MA sequence or sequence-and-slope or cross-over or price/MA cross-over or MA sequence set-up, you should not wait for the opposite signal in order to exit. So, if you take a 10/20MA cross-over as an entry signal, you must not wait for a 10/20 cross-over in the other direction before you exit.
Day trading might be too intense for someone just starting out. I’m assuming you’re going to try and do this on top of a full-time job?
Hi Tommor
So what would you advise me to do then
Hi Purtle
Yes i have a full time job so what would you advise me to do and what strategy to use
Trade off daily charts - set entry orders according to TA, attach stop-losses according to TA, size your position according to the distance from entry to stop-loss against as low a percentage of your account as you can manage until you’re consistently profitable. The next day, if the entry order hasn’t triggered, re-evaluate the TA and see if the chart still shows this as a good trade to take, then re-position the entry order level if necessary, cancel it if the TA has turned against the original idea.
Hi tommor
I think i know what your saying change my chart to daily and use the daily candle to enter my trade using a buy limit order
i look at investing.com everyday to see what the GBP/USD is doing and also on forex factroy i look at the calendar for the day to see what is coming out during the day am i on the right road with doing this
Its wise to check if there;s anything coming up that might interfere with smooth progress of a trade but I never consult the news to find a trade. As you mention GBP, be aware there’s a growing risk of a Brexit deal announcement as we get nearer 2019, and that cold make the GBP shoot up. If the deal turns out then to be not so good, that could make the GBP drop like a stone (again).
that all said, I tend to just follow trends and pyramid the winners.