There are many indicators that can to be used for as a tool trading: RSI, MACD, Stochastics, Bollingerband etc. Some traders have their own favourite indicator which they think its most useful to track buy and sell signals, but have they been profitable in their trades? No for most of them.
I had found that that different products or different currency pairs have different behaviour and characteristic, and so different products or different currency pairs are suitable for different indicators.
So the best way to find out which indicator is the best for particular products or currency pair is to do a back-testing.
I had done back-testing on oil:
Oil Trading: Back-testing for Oil trading. The result shows that Comm Channel is the best indicator to tracking oil trading.
When the indicator signals buy when oil is trading at US$123.58, I took the opportunity to buy 1 lot of super mini oil contract:
Oil Trading: Bought 1 lot of Super mini oil contract
And when the indicator signals sell, I took the opportunity to sell and gain a profit of US$1292:
Oil Trading: Review on my oil trade (closed)
This can be applied to currency trading as well. I had done back-testing on the major currency pairs, and found out that bollingerband is the best indicator to track AUD/USD.
After I find out that bollingerband is the best indicator to track AUD/USD, trading AUD/USD becomes a systematic process to me:
First Bollingerband must signal buy on the daily chart.
Second I use 10 min chart to look for entry level.
Third find a level for the stop.
Using this system I had bought 100,000 AUD/USD at 0.9526:
Binary Trading: Bought 100,000 AUD/USD at 0.9526
And sold off 100,000 AUD/USD at 0.9559, earning a profit of US$330:
Binary Trading: Sold 100,000 AUD/USD at 0.9559
For more trading / investment ideas, feel free to look at my websites.
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