What are the foreign exchange indicators? How to best match them?

Which indicators should be used for foreign exchange transactions? Today I will talk about what are the foreign exchange indicators and how to best match them. 

Financial indicators: The main financial indicators are interest rates, money supply, consumer and corporate debt, inflation, etc. Economic indicators are the basis for determining and affecting the overall foreign exchange market trend, and are the basic analytical indicators for foreign exchange transactions.

Sentiment indicators: Forex traders are aware that the market is emotional. The sentiment indicators mainly include the buying and selling ratio, bull and bear market analysis indexes, and the size of retail investors. Generally speaking, investors who use sentiment indicators are more inverse operations. The sentiment indicators can predict the expected price, and traders can take the opposite behavior. If investors in every market believe that prices will rise, then there is virtually no incentive for prices to rise.

Dynamic Indicators: The Trend Index is an indicator frequently used by investors, mainly including technical indicators such as MACD, RSI, and DMI. Dynamic indicators judge the trend of the foreign exchange market through the coordination of price, trading volume and price. For dynamic indicators, the momentum model converts the difference or ratio between two moving averages.

What is the best match for Forex indicators?

1. KDJ + DMI

In order to secure the safety of short-term trading, the KDJ index is designed with an excellent speed. In the indicator system, it is one of the most sensitive indicators. One is able to capture the relatively small trend of market changes if using KDJ skillfully and flexibly. It is a magic weapon for short-term trading. 

The DMI index can accurately reflect the changing trend of the market in the future, provide investors with the right timing of buying and selling, and better grasp the changing trend of the market. Combining these two indicators can reduce investment risk, improve operational security, and find the best trading point.

2. DMI + MA + VOL

In forex market, the Moving Average is widely used. It can send long and short signals in a timely and clear manner. If combined with the DMI and VOL indicators, it can achieve unexpected results.

In the operation mode, when the DMI and MA release multiple signals, and the volume amplified, it indicates that the market has sufficient upside energy and strong power; if the DMI and MA send multiple signals, yet the transaction volume does not see effective amplification, offensive strength is weak or there are suspected multiple fakes. Conversely, even if the trading volume is enlarged, it is not easy to intervene if the DMI or MA does not have a buying sign.

Therefore, DMI, MA, and VOL can be used as the basis for decision-making only when they are mutually verified and unified. This is the essence of Dow's theory. In view of the operating characteristics of the forex market for many years, this set of signals has focused on mastering several signal matching methods.

3. MACD + MA + VOL

After years of follow-up observations and real operations, this group of indicators has a high application effect. If you can use its matching methods skillfully and flexibly, you will definitely win in the foreign exchange market. The method adopted is: When the indicators of MACD, MA, VOL and other indicators are unified with each other, a reliable buying and selling decision is made. Otherwise, use cautiously.

4. KDJ + RSI + MACD combination index

The actual combat effect of this indicator group is obvious. The specific operation method is: make full use of the KDJ indicator's sensitive response characteristics and capture as many profitable investment signals on the market as possible. After capturing the investment signal, it is not necessary to intervene prematurely, and then use the RSI indicator to give it a test. If the test results are consistent, the investment signal is valid. Why combine the MACD indicator with the MACD indicator? The goal is to further seek the support of the mid-line indicator to avoid false signals in short-term indicators and to add an extra insurance for the intervention. If within a period of time, the currency pair sends the above three indicators with a buy signal at the same time, you can boldly intervene when the exchange rate returns, and its short-term success rate is extremely high, and the probability of hold-up is extremely low (close to zero unless you are at a high Intervening).

Note: A colleague of mine wrote the above article. I share it here to your reference under his permission.