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By Brenda Maison
A lot of forex traders love to use chart indicators such as Moving Average Convergence/Divergence (MACD), moving averages, Stochastics, Parabolic SAR and the Relative Strength Index. Given the popularity of these indicators, many traders wonder if its possible to program forex robots to trade with these indicators.
Indeed it is. In fact, some forex robots already come programmed to use various indicators as the backbone of their trading system, but if you have a forex robot that doesn’t trade with indicators or you would like to program it to do so, that’s a good idea because some of these indicators have been around for a long time and can be quite profitable.
The first step toward making your forex proficient with indicators is making yourself proficient with them. You have to establish what indicators you think might work best with your trading style and which ones you understand. Fortunately, this is easy to do as there are dozens of free resources across the Internet that discuss topics like moving averages, MACD, Stochastics and Parabolic SAR.
Let’s look at how a few of these indicators can be used in conjunction with forex robots.
Explaining MACD
The MACD lines are among the most popular chart indicators that forex traders rely on probably because they’re pretty reliable and fairly easy to understand. The MACD indicator consists of three lines, the first is used to calculate the faster of the moving averages, the second is used to illustrate the slower of the moving averages and the third is used to calculate the difference between the fast and slow lines.
The two lines are not price averages and if you program your forex robot to follow MACD you have to remember that. Essentially what you’ll be programming your forex robot to do is to take long trades when the slow line crosses the fast line in upward direction and take short trades when the slow line crosses the fast line moving down. If you need help with this, read your user’s manual and contact the forex robot’s customer service team.
Stochastics: A Kissing Cousin Of MACD
Stochastics are a lot like MACD in that they involve a slow line and fast line, making this another indicator that works well with forex robots. Stochastics are used to identify overbought and oversold conditions in a particular currency pair. They are measured on a chart numbered 0-100. When both lines are above 70, the currency pair is considered overbought, so you would program your forex to initiate short trades when both lines cross below 70. On the other hand, when both lines cross below 30, the pair is considered oversold, so program your forex robot to take long trades when the lines cross back above 30.
Indicators Are A Good Friend To Forex Robots
If you’re looking for a way to boost your forex robot’s performance, indicators are an ideal way to just that. Just remember to keep the strategies simple so your forex robot doesn’t get confused.
About the Author: Retired Canadian Economist. My main activity since Winter 2006 is trading Forex. I’ve been trading currencies online with the help of EA’s (BTW, the best source for EAs is
Forex Robots
) and I currently manage trading accounts at two Forex brokers in the US and in UK respectively
Source:
isnare.com
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