What is the best Technical Indicator in Forex from freemexy's blog
In order to give y‘all a comparison of the effectiveness of each
technical indicator, we’ve decided to backtest each of the indicators on
their own for the past 5 years.Backtesting involves retroactively
testing the parameters of the indicators against historical price
action. Youll learn more about this in your future studies. For now,
just take a look at the parameters we used for our backtest.To get more
news about WikiFX, you can visit wikifx news official website.
Using these parameters, we tested each of the technical indicators on its own on the daily time frame of EUR/USD over the past 5 years.
We are trading 1 lot (thats 100,000 units) at a time with no set stop losses or take profit points.
We simply cover and switch position once a new signal appears. This means if we initially had a long position when the indicator told us to sell, we would cover and establish a new short position. Also, we were assuming we were well capitalized (as suggested in our Leverage lesson) and started with a hypothetical balance of $100,000. Aside from the actual profit and loss of each strategy, we included total pips gained/lost and the max drawdown. Again, let us just remind you that we DO NOT SUGGEST trading forex without any stop losses. This is just for illustrative purposes only! Moving on, here are the results of our backtest.
Forex trading is similar. It is an art and as traders, we need to learn how to use and combine the tools at hand in order to come up with a system that works for us. This brings us to our next lesson: putting all these indicators together!
Using these parameters, we tested each of the technical indicators on its own on the daily time frame of EUR/USD over the past 5 years.
We are trading 1 lot (thats 100,000 units) at a time with no set stop losses or take profit points.
We simply cover and switch position once a new signal appears. This means if we initially had a long position when the indicator told us to sell, we would cover and establish a new short position. Also, we were assuming we were well capitalized (as suggested in our Leverage lesson) and started with a hypothetical balance of $100,000. Aside from the actual profit and loss of each strategy, we included total pips gained/lost and the max drawdown. Again, let us just remind you that we DO NOT SUGGEST trading forex without any stop losses. This is just for illustrative purposes only! Moving on, here are the results of our backtest.
Forex trading is similar. It is an art and as traders, we need to learn how to use and combine the tools at hand in order to come up with a system that works for us. This brings us to our next lesson: putting all these indicators together!
The Wall