Forex Price Action Indicator
Forex Price Action Indicator;
There is an endless debate within the forex trading community whether investors are better suited to use price action mechanisms or technical indicators when developing their portfolio strategies. The reality is that both sets of strategies have advantages and disadvantages, but the benefits gained from them are based heavily on the timeframe. Let us take a look at some important factors to keep in mind when determining which strategy to use.
What is price action?
The most basic definition of price action is a strategy that involves an investor taking all forex trading decisions based solely on the movement of a currency’s price. A price action strategy does not take into account any technical indicators that may be typically used to determine whether a currency is supporting or resisting a particular trend. Regardless of the various complicated strategies that investors around the world may use, their actions are all accounted for in the final price chart. The need to predict the impact of external global events on the market is eliminated because the price chart will inevitably come to reflect the impact on its own.
The entire focus in price action trading is the current movements taking place on a price chart. There are a number of tools that price action traders use, with one notable example being that of candlesticks. Candlesticks are tools that are used to determine whether a currency is truly on an upward or downward trend. The only information taken into account is that which is provided on a currency’s price chart.
What are technical indicators?
Forex trading using technical indicators goes above and beyond the information presented on a currency’s price chart. While price action trading involves using only price data, technical indicators are used to discover why a particular currency is moving in a certain direction to predict its future behavior. Nowadays, there are a number of technical indicators available for use in the market. However, most forex traders using technical analysis incorporate three main indicators – moving averages, bolinger bands and average directional indexes.
A moving average line is one of the most common indicators that helps forex traders determine whether a currency is exhibiting a bearish or bullish trend, or if there is no trend at all. Moving averages can also help investors identify whether a currency is resisting or supporting price movements. Moving averages are usually created by determining a particular period of time, and calculating the average price within that period.
Bolinger bands are bands that are typically located around a moving average and a currency price. They help investors determine whether a currency is trending, while also suggesting points at which this trend may begin reversing. They help in identifying support or resistance patterns, and in calculating the volatility of a currency.
Average directional indexes are used in tandem with Bolinger bands and moving averages. An ADX essentially calculates the strength of a trend through measurement of gradient. From these calculations, an investor will be able to determine whether a trend is strong or weak.
Which one works?
Financial theorists who develop technical indicators and publish them within the market do so by studying market behavior in the past. As such, they are using previous data and creating measurements that fall in line with this data. When these measurements hold, they can be used by investors to predict the price movement of a currency.
Price action traders, however, live in the present. They react to how a currency is doing presently, and trends that are easily visible on a price chart. When price action traders look at a price chart, they do not need to understand the interplay between demand and supply, but only the final outcome as reflected in a price movement.
The two types of strategies both have their own uses. Technical indicators are shown to have an extremely low probability of success when the timeframe is short. The opposite holds for price action trading. However, as the timeframe of analysis increases, the probability of technical indicators working begins to rise. Investors who are looking for long-term trading strategies may be best placed to use technical indicators over price action. Conversely, investors who prefer to make quick trades within the short term are better suited to a price action trading strategy.
What does Forex Indicator mean?
A forex indicator is a statistical tool that currency traders use to make judgements about the direction of a currency pair’s price action. Forex indicators come in many types, including leading indicators, lagging indicators, confirming indicators and so on. Popular forex indicators include moving averages, relative strength index (RSI) and average true range (ATR). A forex trader must choose the indicators that fit his or her trading strategy.
How to install Forex Price Action Indicator?
- Download Forex Price Action Indicator.zip
- Copy mq4 and ex4 files to your Metatrader Directory / experts / indicators /
- Copy tpl file (Template) to your Metatrader Directory / templates /
- Start or restart your Metatrader Client
- Select Chart and Timeframe where you want to test your forex indicator
- Load indicator on your chart
How to uninstall Forex Price Action Indicator?
To shut down an indicator, one has to remove it from the chart. At that, its drawing and recalculation of its values will stop. To remove an indicator from the chart, one has to execute its context menu commands of “Delete Indicator” or “Delete Indicator Window”, or the chart context menu command of “Indicators List – Delete”.