Best Forex Indicator 2021
Different indicators claim to be what every trader needs to succeed in the forex market. While some of these indicators live up to their hyping, others are merely worthless. The best thing that could happen to a forex trader is to have the best forex indicators at his arsenal.
But, what is the best forex indicator 2020 that can help achieve your financial dream without hassles? In this article, we shall talk about various aspect of top mt4 forex indicators. The drawbacks, qualities of the best forex indicator, and the best forex indicators 2020.
What is a forex indicator?
A forex indicator is a tool which a forex trader uses in examining market data. It is to help in making an informed decision about the market. Taking a look at historical data like currency price, volume, and market performance, enables the indicators to forecast the probable behaviour of the market in the future and which patterns are expected to be repeated.
Disadvantages of using indicators
Useful as indicators maybe, they have a few disadvantages that every trader needs to know of before using them. The two major problems include:
• You can be left behind. Using lagging indicators means that you get the signals to enter a trade only after the markets have made the big moves.
• Leading indicators tend to produce false signals before the market turns.
Qualities of the best forex indicator
For an indicator to get the tag as the best forex indicator 2020. The expectations from traders is that it should meet specific criteria or possess some outstanding qualities.
What readily comes into your is that such an indicator should be able to do almost everything on the market and assume a “super indicator” status. However, here are a few qualities the best indicator needs to have ideally.
Be immune to market challenges
The volatility in the forex market is quite high. International politics, as well as financial issues, have a way of rubbing off on the forex market. Annual reports of foreign banks, a sudden change in government policy towards the financial market, health and other adverse news will usually cause some forms of instability in the system.
Traders expect to see an indicator that will not fail in such circumstances but will be able to provide an update in real-time and save them from making mistakes while trading. The best indicator can do just that and informs the trader ahead of time so that he is always in control.
Minimize your losses
The best forex indicator 2020 should have quality signals with a wonderful hit-ratio and be able to get results that are almost free from losses. While you cannot wholly eradicate losses from the market, a good indicator should limit your losses and help you stay in business. You can always use a mt4 spread indicator.
Trade any market for any duration
The best forex indicator should be able to trade on any platform and market, as well for any duration. Such an indicator should be useful to both long-term traders and a scalper.
The best forex indicator 2020 should equally be useful for forex trading and other instruments like stocks, indices, gold, silver, as well as other commodities.
No single forex indicator has all the qualities you need
In as much as a trader wants what will immune him against all negative market forces, it must be noted that it is near impossible to get an indicator that has all the qualities listed above. No single indicator is a “jack of all trades,” but a combination of indicators with specific functionality will usually do the magic.
One of the strategies to win the market, therefore, is to combine indicators. Ones that are the best in different categories and use them to your advantage. However, it would be best if you understood that using too many indicators at a time can confuse you and make you prone to errors.
Best Forex Indicators 2020
Having looked at the collection of indicators on the market, we decided to pick a few of the ones we feel every forex trader would need.
On-Balance Volume Indicator
Analysts use the On-Balance Volume Indicator otherwise known to as the OBV, in establishing changes in volume flow. The indicator uses a cumulative total of negative and positive trading volume in predicting the direction of prices. It belongs to the leading indicators group due to its ability to change course before the price.
The On-Balance Volume Indicator calculates its data on the chart using a straightforward approach. If the current closing price is over the preceding closing price, the volume is included in the OBV. However, the volume remains the same if the current closing volume and the earlier price are the same. But if the present closing price is below the preceding price, the previous price will be subtracted from the present one.
An OBV indicator that is going up shows a rising price, whereas OBV indicator that is going down indicates a falling price.
Relative Strength Index (RSI)
The relative Strength Index (RSI) can work as an oscillator, in which case, it acts as a system to evaluate alterations in prices and the speed of its occurrence—the indicator swings between zero and 100.
RSI values above 50 show positive, uptrend momentum. The majority of times, overbought conditions are shown when the RSI gets to 70 or above. However, a negative, downtrend momentum is indicated by RSI reading under 50. There is a probable oversold condition when the RSI readings are below 30.
The Fibonacci Retracement indicator is capable of pinpointing the level to which a market is going to move against its present trend. A retracement or pullback occurs when the market encounters a momentary dip.
Traders frequently use the Fibonacci Retracement to verify when the suspect that the market is about making a move. It is because of its ability to spot likely levels of support and resistance, indicative of an upward or downward trend. Traders find this comes handy in deciding where to apply stops and limits, or when to open and close positions.
This technical indicator determines whether a trend exists, how it is developing, and the degree of its strength. This indicator measures a trend by assessing how recent the preceding highest highs and lowest lows were.
The bullish line reveals how recent the highest high is, whereas the bearish line shows how recent the lower lows were.
The Moving Average Convergence Divergence Indicator
The Moving Average Convergence Divergence indicator (MACD) is an all-around indicator used for scalping and by different types of traders. It is quite helpful in comprehending momentum, following and capturing trends.
It shows the connection between two Moving Averages of the price of a security. The default setting of the MACD is the 9-day EMA of the MACD plotted on the MACD. This usually marks the buy/sell signals triggers. To calculate the MACD, you have to subtract the 26-day Exponential Moving Average from the 12-day EMA.
Conclusion of best forex indicator 2021
Though some indicators stand close to being addressed as the best forex indicator. However, one needs to understand that no single indicator can perform all the jobs a trader should perform on the trading platform.
The best forex indicator 2020, therefore, is that indicator that is not 100% perfect. However, it has that versatility to perform different functions at the same time. It is to help the trader succeed in his trade.
On this platform, we have various indicators and tools that enhance your trading capacity. Please explore our site through this link to see which of the tools will be suitable for your trading style.
Finally, do write to us with your feedback about the best forex indicator in the comment section below on our best mt4 indicators website.