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Cyclopip

One combination of indicators that you can try is the RSI + Stochastic combination. Having two indicators will give you more confirmation that a pair is in overbought or oversold conditions. Also, I would suggest that you look at higher time frames as well, for a better idea of how the pair is trading. You might look to short when you see that the pair is overbought in the 1-hour chart, but then realize that it isn't in the 4-hour chart. Also, keep in mind how long you plan to keep your trades on.

over 2 years ago

ForexNinja

Personally, I think overbought/oversold indicators work great given they are used properly. For instance, in a ranging market, buying whenever the oscillator indicators oversold conditions while at the bottom of the range works well. The opposite also holds true for overbought conditions. For trending markets, I only use overbought/oversold whenever it matches the overall direction of the pair. For example, when a pair is supported by a rising trend line, I only give importance to the oscillator when it is oversold. There are times when the oscillator would remain in overbought/oversold territory very long.

over 2 years ago

ForexGump

If you're using a trend following technique such as a moving average cross-over system, you can use the 'overbought' and 'oversold' indicators in an opposite manner. Why? When prices trend, their indicators (stochastics) are usually on the extreme levels, whether 'overbought' or 'oversold.' Being on the extreme level indicates the prices' upward or downward momentum.

over 2 years ago

pip_eater

There’s another good choice that I’d like to recommend. It’s called the stochastic. I use this on my trades at different time frames. And I found that stochastic is somehow accurate at detecting the exact time when oversold or overbought conditions occur. Their danger zone is in the middle ground. This is the time when the market becomes unpredictable. It could move this way or that way even when the direction is only going one way.

over 2 years ago

SweetForexPip

In my opinion, all indicators are the same. They're called indicators; their main objective is to give indications. What’s important is—you must understand what the indicators are telling you.

over 2 years ago

CzarinaCleopatra

Indicators act similar to one another. But my favorite choice is the Stochastic; although I also check the RSI, CCI, and OsMA. My preference lies on the spot divergences rather than the overbought or oversold. It will help a lot when you know you’re in a trending or sideway market. Trending is a one-way direction; while sideway has no direction. In a trending market, you may get killed when you’re using oscillators or making a killing in a sideways environment. You can decide on which of the two you want to happen—just make sure you know what market you’re in.

over 2 years ago

wolfie

You must realize and accept that the knowing part is the hardest to learn. Since the trending or the ranging market is very hard to predict, you have to rely on what you have learned. Keep in mind that most markets trend at 70 to 80 percent of the time; so it’s alright to assume that you’re safe with range bound strategies. Just be alert for the big move because that’s when most of the money are made.

over 2 years ago

masterpipcleaner

The RSI and the Stochastic are what I prefer; though I don’t use them solely. There are times when the trend is not influenced by these extremes. I had some major losses when I relied so much on RSI and Stochastic indicators. Let me share one of my experiences: During a rise of GBP/USD in the 4-hour chart, the RSI was shooting 90. Even the EUR/CAD also read 90. I’ve always known that RSI is regularly overbought at 70. But sometimes the market consolidates too little to show clear areas of the overbought and the oversold. Using indicators became extremely unreliable when the market didn't retrace due to the fact that it consolidated within tight range.

over 2 years ago

pippotel

I like using Bollinger Bands that have 20-period movement with average sailing down into the middle. This usually happens on the 15-minute chart.

over 2 years ago

Sid2009

Hi, I’ve been into demo trading for about 5 months now. The only advice I can share with you is this: whenever you’re using stochastic, you have to go back at the exact time when the market reacted to overbought/oversold—to see what the stochastic was. If the reaction was retracement, the indication may be reliable. Check out this info by observing the before and after of the market for the stochastic indications.

over 2 years ago