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Thread: Trend-following indicators

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    Super Moderator RoboForex Trader's Avatar
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    Trend-following indicators

    Trend-following indicators, or trending indicators help trader to analyse main tendency in the market and direction of the trend either rising or falling. Market exists in 3 basic conditions: bullish trend, bearish trend and flat.

    Bullish trend is indicated when price moves from lower left corner to upper right.

    Bearish trend occurs when price moves from upper left corner to lower right.

    Those terms are derivatives of «bulls » and «bears» - buyers and sellers in trading slang.

    Flat occurs when price goes sideways in horizontal channel.

    Let’s describe Moving Average (MA)

    Most traders think that MA is «lagging indicator». It’s not absolutely true because this indicator filters data for a given period (you can set it in parameters of indicator). For example, if parameter of MA is 2 and it’s calculated using «close» price, it means that it will take into consideration 2 last candles’ closing prices.

    Example is on the Picture № 1:



    We see from this chart that this indicator follows average closing price of 2 periods.

    Of course, such information is not very useful.

    Indicator with very small parameter will often change its direction that will confuse trader in his analysis. Its recommended to set more solid parameter, in this case information will be more reliable. But the bigger parameter we set, the more «lagging» indicator we get.
    On the next chart (Picture № 2) you see MA with parameter 14, using closing prices for calculation.


    Charts above show indicators with calculation method called «simple». You can see how to set it up on picture № 3.


    Calculation formula for Simlple moving average:

    Simple = SUM (CLOSE (i), N) / N
    • where SUM — sum of parameters;
    • CLOSE (i) — closing price;
    • N — number of candles calculated.



    Therefore, calculation of indicator from Picture № 3 is made this way:

    Simple = SUM (CLOSE (i), 14) / 14

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    Rookie mohamed reda's Avatar
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    trading following the trend is the best way to trade Forex successfully for any trader.i think using moving average indicator will be useful to predict the price easily if you are a scalper or a long term trader so that i believe with this indicator and i think it will be useful if you are trading with technical analysis.

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    Registered user rajahentai's Avatar
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    moving average is the most common indicator people used in all over the world. however, this indicator still lack some points, especially to measures when and how the price would go to reversal.

    Quote Originally Posted by RoboForex Trader View Post
    Main trend can be broken but it doesn’t necessarily mean reversal – price can go sideways after that (flat)
    once the main trend has been broken out, and the prices got stuck at some certain levels (sideways or flat). we might want to pay attention into the news, because whether the trend is going to continue or when the reversal would start is affected by fundamental rather than indicators.

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    To be a successful trader a trader should follow the trend of market . Because trend is a good friend of Forex trade .We can predict the market through trend . So a good amount of profit can be earned through this . But it is needed to use a useful indicator with trend . I think moving average and RSI are good indicator . But moving average is just helper but helpful .

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    Raazsr1, i think that truly following a trend will make you earn more profit even easier. But that didn't mean that the trend will always be our friend or trend is our friend. It's about how you learn how they move and how you can take the advantage from them. As long you can use them for the better, profit is what will wait you.

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    Quote Originally Posted by rajahentai View Post
    once the main trend has been broken out, and the prices got stuck at some certain levels (sideways or flat). we might want to pay attention into the news, because whether the trend is going to continue or when the reversal would start is affected by fundamental rather than indicators.
    Good notice. But market can react to this news in many ways. Sometimes, we see rapid reaction, sometimes it's ignored. Indicator itself averages price, it's derivative of price, it can't predict further price action.

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    Registered user dkarev's Avatar
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    Quote Originally Posted by RoboForex Trader View Post
    Good notice. But market can react to this news in many ways. Sometimes, we see rapid reaction, sometimes it's ignored. Indicator itself averages price, it's derivative of price, it can't predict further price action.
    personally for me,i think moving average indicators/trend following indicators are best use when the particular pair we are willing to trade is close or when the market is slow,by so doing we not gonna be involve in any kinda breakout or news that might affect the trend of the market.personally i use the indicators when the pair is not active,market tend to stay on a particular trend for long though it might be slow but it will surely reach mine target.

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    Rookie mohabbat's Avatar
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    yes brother I think trend indicators is so good and profitable from others indicators ,so we can use it on our trading platform.and we see many trend indicators on our trading platform ,parabolic ,B-Band,Moving average etc...but every one is so good and very powerful for trade. and lot of trader use it for better chart calculation.

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    Quote Originally Posted by mohabbat View Post
    yes brother I think trend indicators is so good and profitable from others indicators ,so we can use it on our trading platform.and we see many trend indicators on our trading platform ,parabolic ,B-Band,Moving average etc...but every one is so good and very powerful for trade. and lot of trader use it for better chart calculation.
    I think it's back to each trader himself to use the indicator in the right timing or not. Indicator is only tools to help us to know current condition of market and signal to the next transaction. It's possible to predict the trending movement with indicator but don't rely on indicator as the only one consideration. It's important to look on chart too to know current condition of market, reading news which can move market in high number of pips instantly and any other conditions which can affect on market's movement.

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    Super Moderator RoboForex Trader's Avatar
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    Quote Originally Posted by mohabbat View Post
    yes brother I think trend indicators is so good and profitable from others indicators ,so we can use it on our trading platform.and we see many trend indicators on our trading platform ,parabolic ,B-Band,Moving average etc...but every one is so good and very powerful for trade. and lot of trader use it for better chart calculation.
    Indicator itself will not make your trading profitable. It simply shows position of the market in the past and in present moment, but can't predict future events. For profitable trading, you should need something more, not just indicators.

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  11. #20
    Super Moderator Gamer's Avatar
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    Quote Originally Posted by RoboForex Trader View Post
    Indicator itself will not make your trading profitable. It simply shows position of the market in the past and in present moment, but can't predict future events. For profitable trading, you should need something more, not just indicators.
    i want to agree with you here;
    if we see the indicators of any kind they are just derivatives of the prices, it's only means they doesn't work on much about principle they work according to the wish of the price behaviour.
    i want to add some more text here, wouldn't be it nice if the members takes a look on the price action analysis, more likely it can be a good edge for them to understand what's happening in the market deeply
    of course- our mentor "Value trader" webinars and threads about " price action analysis can be handy".
    mohabbat.
    Try a look here;
    forum.roboforex.com/threads/591-Price-action-basics-Part-1
    Remember only thing/ one indicator or anything doesn't work perfectly, in technical analysis we need probabilities in our favor, and it takes lot of things first to be understand.

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