Forex Trading - 2 Indicators That Will Help You Determine The Long-Term Trend
James Woolley
October 20, 2009
Currency trading is popular with both short-term and long-term traders. A large number of the short-term traders will almost inevitably lose most of their trading capital at some stage, whilst the more patient long-term trader will often generate some healthy returns. Of course that's not always true, but if you employ two technical indicators in particular, then it is a lot easier to achieve decent long-term profits.
The first of these indicators that I want to discuss is the EMA(200) - or the 200 day exponential moving average in other words. This is a very popular indicator amongst long-term traders because it instantly displays the long-term trend when applied to a daily price chart.
This is important because it basically lets you know which direction you should be trading in. So for example if the EMA(200) is sloping upwards then you should only be thinking about opening long positions and if the EMA(200) is falling then you should obviously be thinking about opening short positions.
The second technical indicator you should use is the supertrend indicator. Not every trader will have heard of the supertrend indicator because it's not one of the more popular ones. However it is certainly one of the most effective, and I would recommend you download it to your charting software if you don't already have it.
This indicator highlights the long-term trend in the same way as the EMA(200). If the indicator is currently green, then the price is in an upward trend and if it's red the price is currently in a downward trend. So by glancing at this indicator on both the current time frame and the longer time frames if you want additional confirmation of the trend, you can instantly find out whether you should be looking to go long or short.
If you apply both the EMA(200) and the supertrend indicator to your daily charts they should enable you to make sure that you are always on the right side of the trend, which will therefore help you to be a consistently profitable trader. Of course you may well want to use additional indicators such as MACD, stochastics or short-term EMAs, for instance, to determine the optimum entry and exit points.
However the main point I want to get across is that if you are serious about developing into a successful long-term trader, I suggest you begin by using the two indicators that I've discussed in this article. Once you get used to them and are able to instantly recognize the trend, you can then start devising a trading method that will help you squeeze out some decent profits from trading this long-term trend.
Click here for more information about a forex course that will teach you all the basics of forex trading, and to read a full Forex Nitty Gritty review.
The first of these indicators that I want to discuss is the EMA(200) - or the 200 day exponential moving average in other words. This is a very popular indicator amongst long-term traders because it instantly displays the long-term trend when applied to a daily price chart.
This is important because it basically lets you know which direction you should be trading in. So for example if the EMA(200) is sloping upwards then you should only be thinking about opening long positions and if the EMA(200) is falling then you should obviously be thinking about opening short positions.
The second technical indicator you should use is the supertrend indicator. Not every trader will have heard of the supertrend indicator because it's not one of the more popular ones. However it is certainly one of the most effective, and I would recommend you download it to your charting software if you don't already have it.
This indicator highlights the long-term trend in the same way as the EMA(200). If the indicator is currently green, then the price is in an upward trend and if it's red the price is currently in a downward trend. So by glancing at this indicator on both the current time frame and the longer time frames if you want additional confirmation of the trend, you can instantly find out whether you should be looking to go long or short.
If you apply both the EMA(200) and the supertrend indicator to your daily charts they should enable you to make sure that you are always on the right side of the trend, which will therefore help you to be a consistently profitable trader. Of course you may well want to use additional indicators such as MACD, stochastics or short-term EMAs, for instance, to determine the optimum entry and exit points.
However the main point I want to get across is that if you are serious about developing into a successful long-term trader, I suggest you begin by using the two indicators that I've discussed in this article. Once you get used to them and are able to instantly recognize the trend, you can then start devising a trading method that will help you squeeze out some decent profits from trading this long-term trend.
Click here for more information about a forex course that will teach you all the basics of forex trading, and to read a full Forex Nitty Gritty review.
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