The Top 5 Technical Indicators for Profitable Trading

Welcome to the top five technical
indicators for profitable trading. By the end of the video you’ll have a good
understanding of how people use technical indicators to trade with, with
the examples we provide. Technical indicators can be very confusing and
daunting for beginner traders. They don’t have to be, and in this video give you a
basic understanding of them as useful technical indicators to help you make
profit in the markets. Firstly, all the indicators we are going to show you or
created from basic candlestick data. They all take their information from the
basic price action. The open, high, low and close data. If you need to learn more
about the basics of candlesticks then please click here and watch our
three-part candlesticks series here is some of the most common mistakes traders
make with technical indicators. Don’t overload your screen of indicators. Only
display the indicators on the charts that you’ll actually use. A lot of
traders overload the charts with indicators as an excuse to over trade.
Remember, indicators are an indication of something happening in the market. They
aren’t a crystal ball trying to predict the future. Don’t blame the indicators
when a trade doesn’t work out no matter which indicators you use you will still
need to take losses in trading. The two types of indicators. There are two main
types of markets trending and range bound or sideways markets. A trending
market looks like this where the market is moving in one direction, a range bound
or sideways market looks like this, where the market is moving up and down within
a specific range indicators tend to be suited to either trending or range bound
in sideways markets. Indicator one: RSI the Relative Strength Index compares the
magnitude of recent gains to recent losses in an attempt to determine
overbought and oversold conditions of instrument. As you can see from the chart,
the RSI ranges from 0 to 100. An instrument is deemed to be overboard
once the RSI approaches a 70 level meaning that it may be getting
overvalued and is a good candidate for a pullback or reversal. Likewise, if the RSI
approaches 30 is an indication the instrument may be getting oversold and
therefore likely to reverse. Traders will often use the RSI either coming back out
to its overbought or oversold areas as a signal or partial signal to enter a
trade. As we can see, the RSI is often accurate when
indicating when a market will reverse. A trader using RSI should be aware that
large rallies and drops in the price of an instrument will affect the RSI by
potentially creating false buy or sell signals. Traders often combine the RSI
with other indicator signals such as MACD crosses. Indicator 2: MACD. The Moving
Average Convergence / Divergence is one of the most well known and used indicators
in technical analysis. This indicator is made up of two exponential moving
averages which help measure momentum and an instrument. These moving averages and
the changing distances between them become the MACD. Convergence simply means
the moving averages are moving close together, and divergence simply means
they’re moving away from one another. When the shorter-term moving average is
above the longer-term moving average this area of the indicator will show
activity when the shorter-term moving average is below the longer-term moving
average, this area of the indicator will show activity. The centre line, of which
the MACD is plotted around, indicates where the moving averages are equal and
when the MACD passes through the centre line this indicates the moving average
is crossing. The signal line, here in red, is a moving average of the MACD values
themselves. Typical values for the MACD are 26 and 12 exponential moving
averages, and 9 for the signal line. The farther apart the moving averages and
the greater the momentum, the farther away the MACD will be from the centre
line. Traders use the MACD and signal line crosses, such as these, to indicate
momentum trades. You can see how these crosses often match up with market moves.
Traders also use the MACD crosses to indicate where momentum is coming out of
the market and may use it is a signal to exit a trade. Indicator 3: Bollinger Bands.
A Bollinger Band starts off a simple moving average it then has two standard
deviations plotted away from it. Now sounds a mouthful, but the important part
is because standard deviation is a measure of volatility, Bollinger Bands
adjust themselves to current market conditions. When the markets become more
volatile, the bands widen and move further away from the average. During less
volatile periods the bands contract, moving closer to the average. The
tightening of the bands is often used by technical traders as a early indication
that volatility is about to rapidly increase as volatility often follows
periods of lack of volatility. The market spent most of the time within the bands
and when the price action reaches the edge of the bands, it is often more likely
to reverse and come back into the range. This is used as a signal by reversal
traders to take a trade. This is similar to the oversold and overbought
conditions of the RSI. Indicator four: Super Trend Indicator. The super trend
indicator is an excellent indicator of trend direction. It can be used as a
foundation of a trading system that is based on trend following. One of the most
popular ways to use this indicator is to enter the market after a pullback. For
example, if the market is on a downtrend, indicated by red, wait for a green
pullback and then re-enter the market once it turns red again. The same can
apply in up trending markets. Here we can see how this indicator accurately tracks
market trends. It can be refined through the settings to match the specific
instrument. Indicator 5: Confluence. The last indicator isn’t a new one it’s
indicated confluence,which means to use multiple indicators and their signals to
take a trade. Here we have the RSI and MACD we looked at with the RSI moving
into overbought territory here. Remember, that indicates
the market will reverse. However, we want to help us filter out false signals on
the RSI so we also look at the MACD to give us confluence. We can see is
indicating the momentum has come out of the market as far as the market rallying
or going up is concerned. And we have an MACD cross here. A signal to enter this
short trade could be waiting for the RSI sights come back out of the overbought,
and also waiting for the MACD cross. We can see that those combined signals or
an indication that captures this trend. We can use the opposite signals to
indicate when the momentum is coming out of the market and it’s more likely to
reverse and the market to retrace back up the opposite direction of our trade,
and therefore is an exit signal. In addition to the RSI and MACD signals we
can add further confidence this trade with a Bollinger Band and the Super
Trend Indicator. We can see the market is at the top of the Bollinger Band here,
but we could also wait for the Super Trend Indicator to change right here
before taking the short trade. And now we have the confluence of four
indications. We have an RSI coming back out of overbought.
We have an MACD cross. We have the market going to the edge of one of the
deviations on the Bollinger Band, and we also have the Super Trend turning back
to red. This is the sort of confluence you should be looking for with technical
indicators on various markets to see how you can find opportunities to take
profitable trades. There are hundreds of indicators a trader can choose from. The
five we’ve spoken about on the best ones to developed trading strategies from.
Take note how the indicators work with certain mark conditions and see if you
can see patterns in the market. *Click our next video when it appers above*

45 Replies to “The Top 5 Technical Indicators for Profitable Trading”

  1. Simple, inspiring, well articulated and straight to the most important ingredients for trading. Thanks so much.

  2. Trading can be profitable when using the right indicator and most importantly under professional guidance

  3. Nope, have virtually no luck with RSI and MACD, how bout no indicators. Price action is everything, all the rest is noise.

  4. (Noob) I can't find Super Trend Indicators on the platform i'm using (Etoro) Are they occasionally referred to by a different name?

  5. Hi, I wonder are you still offering a free short consultation, I couldn't find the link on the site. A few mins on skype would be great.

  6. I'v got into this a few weeks ago and was constantly thinking where the hell is this RSI for… So THANK YOU! This video was very helpfull.

  7. Don't take this the wrong way because that was a very clear and very concise explaination,and I appreciate it. That being the case, how are 90% of people still losing in forex with this information?

  8. This is the first time I have seen this version of MACD…How can I get it for MT4 download. Really great video BTYW, THANKS A BUSHEL.

  9. The market is a brutal place. Forget trying to be liked. Need a friend? Get a dog.

    The market doesn't know you and never will. If you are going to win, someone

    else has to lose. If you don't like these survival-of-the-fittest rules, then stay out of

    the zero-sum game

  10. I have had a good look at forex trading and for the amount of money it seems can be made from it, it does not seem difficult. Is this an illusion and what would the requirements be?

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