Indicators and confusions

Hi All,

I am very new to forex and have just started with the demo account. While reviewing the chart for a currency pairs I have noticed that indicators would give an opposite signal in various time frames. For e.g. Stoch on 4 Hr Chart a pair would appear Over brought and when you move on to 30 min or 1 Hr Chart, it appears as Oversold?


4HR


30 mins (Stoch and RSI not in Sync)

Sometimes I also notice that two indicators also display opposite conditions, for e.g. Stochastic displays over sold but RSI is near over brought range.

Due to such issues I am not able to decide the followings:

  1. Which time frame should I consider as the correct one 4HR or 30 mins (I am not able to get the clear picture of wheather the pair is really over brought or over sold)?
  2. Based on time frame which is under consideration, entry and exit are determined, so if I go with 4HR values, I need to place a SELL order, but that contradicts with the 30 min value which shows over sold and vice-verse

Has anyone come across such issues? If yes, how do you deal with them?

if new, try the other way round:
study other traders’ strategies, many are here, here, here or here and after getting the spirit then it is time to build your own strategy from scratch.

ps. what you mention/observe is obviously true; yet writing down a way to deal with it would take text that would exceed the characters allowed for the forum’s posts

Could we trade with out indicators? It’s a bit confusing to learn/

Dear ‘iunknown’,

as my predecessor ‘etfak’ has said, it would take a long time to go through this in one answer…

The bottom line, I would say (quite simplistically, I know), would be to always go by the higher time-frame to confirm the general trend: if, for example, the 15m and the 4H charts gave you contradictory signals, why not try the Daily or even Weekly and Monthly time-frames? Irrespective of whether you traded these higher time-frames or not, just taking a look at them may save you a lot of confusion in terms of the pair’s direction.

In terms of indicators, RSI and Stochastics work very similarly, so rather than overloading your senses with potentially contradictory signals, just choose one oscillator that you can work well with, and get to know how its signals perform on any pair (or pairs) over a period of time, and see how effectively it enhances your probabilities in terms of profitable trades.

I hope this helps…
Cheers.

1 Like

Different time frames can and will produce different signals in the same currency pair. You should focus on one timeframe and then develop your trading strategy based on that. There is nothing wrong with looking on a bigger timeframe for the general trend and then go lower, but in the end your trading strategy should be fine-tuned to one timeframe only.

I agree with everyone especially with the bear. I speak from experience, I use to try and get everything to line up and confirmed with different time frames. Only confuses doesn’t help the time that it took me to learn it was time well spent, the time I spent after was a waste to . You want to use the time frame you’re trading. Some people use the next highest time frame from the one they are trading, to verify trend, as well some people use the next lowest to confirm the trend. Personally I think that is a waste as well, but that’s just my opinion.

" Alma" As far as trading with no indicators you could, but you’re putting yourself at a disadvantage IMHO. Depending on how you are trading, indicators are a great add on tool to help you in your decision making process. People get in trouble with them when they try to use them in place of their decision making, but if you use them as one source of info, they can help, especially when you first start out. When you first start everything is or can be complicated, you won’t believe how fast and how much this changes if you take the time to learn and build a strong foundation.