There are many different types of indicators in the forex market. Due to recent advancement in technology, the professional traders can easily get access to tons of indicators in the forex market. Every single indicator in the forex market has its own unique advantage and functionality. Though the indicators are blessing for the professional traders but most of the novice traders in the financial market often lose too much money in the forex market since they overloaded their trading charts. They simply think that by using too many indicators in their trading chart they will be able to execute high-quality trades in the market. But when it comes to real life trading, by using too many indicators they are simply making things overly complicated. In this article, we will discuss how to use the double stochastic indicators in the forex market and make consistent profit in the market.
Double stochastic indicators: Indicators are of two types, leading and lagging. The leading indicators always generate early trading signals and lagging indicators generates delayed trading signals. Most of the novice traders participated in forex trading indices without knowing the basic difference between these two types of indicators. Stochastic indicators are often known as oscillators in the trading community and professional traders use them to find the overbought and oversold conditions of the currency pairs. The double stochastic indicators are nothing but two stochastic indicators with a different value of the period. The value of the indicator can be changed at any time from the trading platform and the professional traders tweak the value of this oscillators to filter high-quality trades in the market. For instance, if we use the default settings in one of the stochastic oscillators and use 5 periods in other stochastic oscillators in the same chart than we have our double stochastic in the market.
Finding the oversold and overbought region: We already have stated that stochastic indicators are being used by the professional traders in the forex market for finding the overbought and oversold conditions of the currency pairs.If you are relatively new in forex trading indices then you might find it a little bit difficult to find the exact overbought and oversold conditions of the currency pairs. But we will give easy solutions to this problem. All you need to do is to use two stochastic indicators with two different periods. For instance, you can use 5 and 3 value in the period section of the stochastic oscillators and make your own double stochastic indicators in the market. You will be basically looking for the same type of trading signals from both the indicators at the same time to execute your trades in the market. For instance, if both the indicator says that the currency pair is oversold than we can go long in that certain assets in the market.
Support and resistance level: Once we find the perfect oversold or overbought conditions of the currency pairs that we need to look for the perfect support and resistance level in the market. Most of the professional traders look for price action confirmation signal in forex trading indices after they find a trading signal in their double stochastic indicators. Since you are trading with leading indicators in the market you can literally wait to execute your orders in the market until the price hit a certain key support or resistance level in the market. And if you know the art of price action trading then you can easily confine the stochastic indicator trading strategy with the price action trading strategy to execute high-quality trades in the market.
Summary: Trading with the indicators is very tricky. You need to learn how to deal with the indicators in the forex market so that you can use your other trading arsenal in the market. As a professional trader, you should never execute any orders in the market based on indicators reading only since it will greatly increase your risk exposure in the market. In the eyes of trained professional indicators can be extremely profitable if used with other trading parameters in the right orders. So when you use the indicators in the forex market make sure that you follow proper risk management factors so that if the trade goes wrong you can accept the managed the loss without any mental stress.