Stupid question but wondering if any of you have come up or come across a good reversal indicator? I have a decent system right now but i tend to get hit hard on days when the currency reverses.... running out of ways to try and forecast or at least find a better way to avoid some of the reversals. trying to get a fresh perspective.. thoughts anyone?
katie, I'm a noob in forex, but if experience in futures is worth anything, I'd say you're setting yourself up for failure in searching for that magic indicator and trying to forecast. Stick to basics. Price action. Patterns. Pivots. Support/Resistance. Channels. There is a great thread by Anekdoten here just on that. Although I haven't read past the first 5 pages, lmao, it IS the best thread probably ever created for new and struggling traders, even if its 2000 pages long. Once you did that, you can start changing the perspective from which you look at price. Is time-based charting really the best way to view price? Maybe I should try something else? Explore.
thx for the reply. let me clarify, i'm not looking for a magic indicator... that doesn't exist let's be frank. every indicator over a long period of time will produce pretty much the same results... however certain indicators are good for predicting certain things. i'm looking for something that is statistically better at identifying reversal points. it's from that small statistic... even if it's right only 40% of the time.. that will enhance the profitability of my system exponentially. it can be anything, fib retracement, MACD, etc etc.. just want to hear what everyone else uses
Calling market tops and bottoms is the hardest (and most profitable) trading feat to accomplish. Nobody in their right mind would share a good reversal indicator with anyone. Gifts won't work, because if they did, nobody would gift them away. Best of luck.
i don't need that actually... not a top or bottom... just a "temporary trend change" ie. for example i use Stoch as my momentum indicator... i'm looking for ways to try and avoid days where the stoch may potentially reverse from bullish to bearish... don't need to get an actual top of the mkt as you say.... the reversal sometimes might only even be for a day or two but it's still annoying for me.
I'd recommend you concentrate on price action, exclusively. Be it for trend continuation or pullback/change. It's a mistake to define price action in terms of indicator activity. All indicators lag price. Not the other way around. Sounds like you're a tad green. Trust me, indicators aren't reliable. The market goes through periods of range expansion and contraction where every indicator appears to work, then doesn't, respectively. If trading were as a easy as a stochastic and a pullback indicator, everyone would be doing it. Think about it. The answer you're looking for has nothing to do with that.
It can be a very naive answer, but I think you can only know there is a change in a trend when it does occur, then you could use Dow Theory to define your trend and be careful when in a bull trend a new low is below the last low or when your new high is not higher. In terms of indicators, divergences in MACD are often checked by traders
Most indicators will give momentum on a long setting and short wave oscillations if you reduce the settings to whatever you desire. Go for half of your current setting and if that doesn't provide what you are looking for continue halving until you reach the sensitivity you need. Didn't you try that already?
I'm guessing that by you looking for a good reversal indicator that you are trying to enter trades at the expected reversal area......vs exiting already profitable positions just before or just after the expected reversal - which is the safest (only?) way to trade reversals. Most traders wipe out their accounts attempting to enter trades at tops or bottoms......usually just a matter of when, not "if" those losing trades completely evaporate past winning trades, devastating trading accounts in the process. Anyway, in my opinion, there are some good indications of probable reversals but it can depend on various things, like time frame combined with the steepness of trend combined with S/R levels - then perhaps throw in MACD, RSI, MAs etc. Overall, safest to trade with the trend, then exit at expected tops/bottoms. This might not produce the huge winners but overall enjoys the highest probability of producing winning trades consistently - and that's what counts.
I found moving average crossover systems are way too slow. And slow stochastics is way too fast. I ended up finding ways to use price level and moving averages together. And I can vary the price levels if you will to speed up or slow down the signals. You can also try looking at different time frames and different currency pairs. Also, getting the hell out of your position once you see signs price is changing directions may help.