This post is written by Jet Toyco, a trader and trading coach.
Forex indicators are probably the first thing you encounter when learning about technical analysis.
You’ve learned popular indicators such as:
However, the forex indicators that I’m about to share with you today will not only help you better time your entries and refine your trading process…
But these forex indicators can also be applied in any trading method and timeframe.
Are you Interested?
Great, then let’s get started.
What Makes A Great Forex Indicator
Before we get to the good stuff…
We must be on the same page on what makes a great forex indicator so that you know where I’m coming from.
Now, the first criteria is that the forex indicator…
#1: Helps your trading execution
Let me remind you…
When entering a trade, a wrong press of a button or an “extra zero” can cost you big-time.
So you’d want to get a forex indicator that would help you reduce errors on your execution so that you’d save a lot of money in the future.
It makes sense, right?
Next, get a forex indicator that…
#2: Helps you with your market selection
I know this might be hard to stomach, but I have to tell you the truth.
If you depend on other people’s opinions to enter or exit a trade, then you shouldn’t be a trader (at least for now).
Because if you’re unable to produce your trading ideas or if you’re inconsistent in selecting which forex pairs to trade…
Do you think you can expect to see consistent results?
I don’t think so.
That’s why we need an indicator that can help you solve this problem.
To know precisely which forex pairs to trade no matter what kind of trading style you have.
Finally, a forex indicator…
#3: Must be free and accessible
It would be a bummer if I’d tell you to put some cash into my pocket first to get these indicators, right?
We don’t do that here.
Because all of the indicators I’m going to share with you are free.
Then let’s get right into it.
Forex Indicator #1: Currency Strength Meter
This forex indicator (the one you see on the upper left) measures the strength of other currency pairs relative to the USD.
The higher or lower the value, the stronger or weaker the currency pair is.
The closer it is to zero, the more likely the currency pair is in a range.
Now, how do you use this indicator?
You trade the weakest and the strongest pairs.
The currency strength indicator shows that the strongest pair is GBP, with NZD weakest.
What would you do?
Consider looking for shorting opportunities on GBPNZD or buying opportunities on NZDUSD.
Again, this is a market selection indicator.
So you can use this to complement your existing trading strategy no matter what timeframe or trading style you have.
Pretty awesome, right?
Forex Indicator #2: Forex Clock
Did you know that the forex is open for five days, 24 hours a day?
Good, how about this…
Did you know that the forex has four market sessions?
Nice, you’re pretty damn good.
Alright, how about this one…
Do you know what time those sessions open and close precisely relative to your country’s timezone?
Aha, now that’s a hard one.
If you know, remind me to give you candy when we meet as your reward.
But for most of you reading this, there’s a high chance that you don’t.
What if we have a forex indicator that shows us:
- The current market session
- When the next market session opens
- When does the current market session end?
Let me introduce you to the Forex Clock:
Knowing the schedule of these market sessions is crucial to your trading.
Because it tells you when you should or shouldn’t be trading if you’re an intraday trader and helps you manage your time if you’re someone with a full-time job.
Pretty handy, right?
Forex Indicator #3: Donchian Channel
The Donchian Channel is a forex indicator I’ve mentioned a lot of times in the past.
Because again, whether you are a day trader, swing trader, position trader…
This forex indicator has its place in every trading style and timeframe.
But what is it, exactly?
It visualizes the price’s highest high or the lowest low.
So if you want to know the highest high and the lowest low of the price for the past 50 days, it will look something like this…
50-period Donchian Channel on XAGUSD:
So, how do you use it?
The Donchian Channel consists of three lines:
- Upper channel
- Basis line
- Lower channel
If you’re looking to trade pullbacks, then you want to wait for the price to close below the basis line in an uptrend.
Close below the basis line on Palladium:
Then enter once it closes back above the middle channel.
The candle closed back above the basis line on Palladium:
And it makes sense.
If you’re looking to catch breakouts, you can wait for the price to close above the upper channel.
Donchian Channel breakout setup on Brent Crude Oil:
Having this indicator on your chart shows you where the breakout points are precisely so that you never second-guess yourself again.
This is just a glimpse of what the Donchian Channel indicator can do.
So if you want to learn more about it, I suggest you read this article here: Donchian Channel Strategies That Work
At this point, I’ve shared with you forex indicators that will help you with your trading routine and entries.
However, the next forex indicator that I will share with you is the most important one.
So stay with me here and read on…
Forex Indicator #4: Pip Value Calculator
I’m sure we’ve been through this situation.
You’re new to the forex market and opened up a small account.
Since you have no clue how lot sizes work in forex, you say to yourself:
“Alright, let’s just buy 100 lots; what can go wrong?”
“I buy 1,000 shares all the time on stocks, shouldn’t hurt, right?”
But what you don’t know…
Every second, a pip that goes against you costs you $1,000.
No wonder some new traders’ accounts suddenly disappear the moment they click that buy button.
Can you see how important it is to know your pip value?
How exactly do you use this forex indicator to your advantage?
We use this formula.
Risk amount / Stop loss in pips = Pip Value
For example, you have a $2,000 account, and you don’t want to risk more than 1% per trade.
It means that when your stop loss gets hit, you won’t lose more than $20.
Are you still following?
Next, let’s say that you’re about to enter a short trade on EURUSD, and the distance between your entry and stop loss is 100 pips.
What should your pip value be?
Let’s use the formula.
Risk amount / Stop loss in pips = Pip Value
$20 / 100 = Pip Value
There you go!
It means that your pip value should be $0.20 and that you should enter the trade with 0.02 lots.
At this point, I shared with you a ton of helpful forex indicators.
Some help you with your strategy, process, and even risk management.
So now I’m sure you’re asking:
“Where do we download these indicators?”
“What platform should we use?”
“Are you scamming us, and it’s paid?”
I’m a man of my word.
What if you can download them all at once for free?
You heard me.
There is no need to scour the internet to find these indicators because I have them here for you.
Unfortunately, these indicators are only compatible with MetaTrader 4.
Nonetheless, if you’re interested in getting your hands on the indicators we’ve discussed today and more…
You can check it out here:
Let’s do a quick recap of what you’ve learned today.
While it’s true that I could’ve shown you other complicated forex indicators and trading robots…
I ensured that these forex indicators are versatile and can benefit you no matter what type of trader you want to be.
What does it mean?
It means that you can use all of these indicators simultaneously!
- You can use the Currency Strength Meter to know which forex pairs to trade
- You can use the Forex Clock to determine the best time to trade
- You can use the Donchian Channel to time your entries
- Finally, you can use the Pip Value Calculator to apply risk management
That’s what it’s all about!
So over to you…
What forex indicators outside of this list helped you in the past?
Have you already tried some of these indicators?
Let me know your thoughts in the comments below!
This instilled me comprehensive knowledge to complement and supplement on the little knowledge i had thankyou so much ma favorite Teo for this awesome insights
Great to hear that Mweru 🙂
Rayner you have been awesome from the beginning. God bless you
Thank you for the kind words to Rayner Arise!
I currently use Donchian channels with great success for trend confirmation. I’ve discovered all I need other than these are a secondary confirmation indicator (volume/volatility) and a decent exit indicator.
Thanks for introducing us to this elegant and effective indicator. Keeping trading simple is certainly one of the keys to success in the forex market.
Definitely my favorite indicator as well, you’re welcome!