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Thread: Trend-following indicators

  1. #1
    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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  2. #21
    Registered user jackcm'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.
    Totally agree to this point. This is the reason why now I need to change my trading approach. I was only one week since I stopped using technical indicators but I think it works for me. In fact, maybe technical trading strategy may work but I think it is not realistic. Of course trader who depends on such thing like that will lose soon.

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  3. #22
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    It's not wrong to use indicators to support us in making decision but don't rely on indicators to determine market's movement. It's possible to use Moving Average to know tendency of market's movement but we should consider news too which can give impact to market's movement too. So, don't rely on Moving Average only but if it is possible then it's better to use another consideration. And also, we should know that current condition is ranging or it has become overbought or oversold too to know if current price would move trending or not.

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  4. #23
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    One of the best indicators which tells the trend is Moving Average . Especially the 200 MA , which is only for long term trader. It is a very very good indicator and different traders have different strategies with this Moving Average indicator. Surely it is also a must have indicator in every newbie/expert indicators top list.

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  5. #24
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    i believes that it might be one of the best, but the principles of usage and the way that i is is too simple, that is why i did not gave it a shot before.moving average one of the best indicators in that case I also use moving average. I can enter the market and when I quit it and close the trade before going.

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  6. #25
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    I see that there are some trader who use three line of Moving Average with each different setting. Can anyone tell me how to make these setting?i mean, they are defending on crosses, but I dont know what is the setting

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  7. #26
    Rookie Azis Muslim's Avatar
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    Thank you for this good thread. Previously I've also read and use the same indicator is a moving average. But I read in a previous thread is not only about the 14 moving average but also 7 and 21. Using a moving average with no other indicators that support, I think, is still less accurate than the 3 combine moving average I was saying. For the demo account, I think this technique is worth a try.

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  8. #27
    Registered user opan's Avatar
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    Quote Originally Posted by Grandhis View Post
    I see that there are some trader who use three line of Moving Average with each different setting. Can anyone tell me how to make these setting?i mean, they are defending on crosses, but I dont know what is the setting
    for trend following indicator that all of us who use it is up and what is the most easy to read so do not let us lose what we have in the same way, we should use a simple indicator we follow the analysis not even make us confused, in the case of the moving average setting is very easy to use in my opinion

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  9. #28
    Rookie Azis Muslim's Avatar
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    Quote Originally Posted by opan View Post
    for trend following indicator that all of us who use it is up and what is the most easy to read so do not let us lose what we have in the same way, we should use a simple indicator we follow the analysis not even make us confused, in the case of the moving average setting is very easy to use in my opinion
    Simple indicators that it allows us to trade and do not make us confused. Our strategy to maximize the use of simple indicators, we also have to do some analysis before determining when and where to open a position. If you are a trader who follows the market trends, it is better to wait until prices break through support or resistance points. If we open price at the right place and time, it is very easy for us to gain a lot of profit.

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  10. #29
    Registered user dkarev's Avatar
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    one of the best indicators i use when i was new to forex trading was the MA and i only use them to understand the trend of the market and to be sincere if a newbies can understand the use of this indicators very well he/she stand chance to understand the concept of the market on time

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  11. #30
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    I believe that forex trading is a special quality of art of earning money, that means what type of trade you want to start is depended om your special type of skill. if you have a lot of skill and a lot of experience ,there is chance to win. here moving average is really awesome indicator for me.as well as from my success my friend started to introduce moving average but several time he failed. so success is dependent on own strategy.

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