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What is the Best Technical Indicator in Forex?

Now on to the good stuff: Just how profitable is each technical indicator on its own?

After all, forex traders don’t include these technical indicators just to make their charts look nicer. Traders are in the business of making money!

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.

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 (that’s 100,000 units) at a time with no set stop losses or take profit points.

Also, we were assuming we were well capitalized (as suggested in our Leverage lesson) and started with an example 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:

The data showed that over the past 5-years, the indicator that performed the best on its own was the Ichimoku Kinko Hyo indicator.

Surprisingly, the rest of the technical indicators were a lot less profitable, with the Stochastic indicator showing a return of negative 20.72%.

Furthermore, all of the indicators led to substantial drawdowns of between 20% to 30%.

However, this does not mean that the Ichimoku Kinko Hyo indicator is the best or that technical indicators as a whole are useless. Rather, this just goes to show that they aren’t that useful on their own.

Think of all those martial arts movies you watched growing up. Aside from The Rock and the People’s Elbow, no one relied on just one move to beat all the bad guys. The Rock used a combination of moves to get the job done.

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 Big Three Trading Strategy: Step By Step (New Update)

Our featured powerful strategy this week is called The Big Three trading strategy. This strategy will show you what the most accurate intraday trading indicators are, the best combination of indicators for day trading, swing trading and scalping, the most reliable technical indicators, and most likely is the best forex indicator strategy you will find. This strategy specifically uses the most popular forex indicators on the market and uses those indicators to help you make a great trading entry. In fact, we feel like these trading indicators were the best forex indicator 2015, best forex indicator 2016, and still holding true to being the best indicator for 2017 and beyond. These indicators are proven best forex indicators that most professionals use every single trade that they make.You can also read about budgeting in forex for a better trading.

If this “Big Three” term sounds familiar to you, it’s because it’s a common term to identify three highly important prominent entities in any given group or subject.

For instance, the professional National Basketball Association team Miami Heat (from 2010–2014) got together Chris Bosh, LeBron James, and Dwyane Wade.

At the time, these NBA players were considered the three prominent super stars in the league. Once they united, they were arguably the best trio to ever play the game together. Because of that, they found great success winning two championships.

And before them, there were another trio called the “Big three,”

It was the Boston Celtics (from 2007–2012) who had Ray Allen, Kevin Garnett, and Paul Pierce.

I could go on and on going back in history about this but you get the point.

When three highly important entities or group of people get together and work with each other, the results are usually astoundingly great.

So we thought, what better way to prove that to you then to get three entities on your chart to all work collectively together.

Our goal here is to teach you something that works and does not require hours of chart analysis on your part.

With that being said, let’s take a look at these three special indicators that will show you some incredible winning trades when you apply them on your chart. You can also read our best Gann Fan Trading Strategy.

Here are some key details about the strategy that you may want to know before we get started.

How to Discover the Most Popular Forex Indicator Important Details

  • This strategy can be traded onany given time frame
  • This can be used for swing trading, day trading, and scalping
  • This strategy can be traded with any market, such as, Stocks, Futures, and Forex
  • It can be a great addition to your current trading plan

Best Forex Indicator combination: Indicators Used (most popular forex indicator)

Trading Indicators list:

  1. 20 Period Simple Moving Average
  2. 40 Period Simple Moving Average
  3. 80 Period Simple Moving Average

Please note that is strategy does work the way we are going to show you, however, we get traders sometimes that tell us that they tweaked the strategy that we showed them. This is also fine! We all trade differently. We loving hearing your feedback!The best forex indicator free downloads are to use these three indicators. They come standard on all trading platforms and are easily the best forex indicator mt4. Here is another strategy called Time-Based Trading Strategy.

So now let’s jump into the key rules of the “Big Three” Trading strategy.

Step 1 of the Big Three Trading Strategy: Apply Indicators to Chart

Apply all of the three moving averages to your chart like this:

You can make them green, blue, red, pink, etc… The color is just your personal preference.

Again these are 20, 40, 80-period Simple moving averages. These are the best trend forex indicators and will help you determine trends and every time frame.

After studying the charts and applying many different moving averages, we found these three to work extremely well together for this particular strategy. Which is why we called them the big three ??

Step 2 of the best three trading indicators strategy: The Trend… Up or Down?

Once your “Big Three” indicators are on your chart, go ahead and find a current up trend or down trend.

To do that simply look at where the price action is and determine if its above the moving averages or below

If the price is above the three moving averages you have an uptrend:

However, if the price is below the three moving averages then you have a downtrend:

Note** if you see something like this:

If The market is flat and the price action is not making a new high or low and just saying stagnant…

I would avoid this type of market because we are looking for a trending market, not a flat or “sideways” market.

Step 3 – Wait for entire candle to close outside of Moving averages + Pull Back in Price Action + Continuation of Trend

Wait for the price close below lowest moving average in a downtrend:

Or, Wait for the price close above highest moving average in an uptrend:

(click the pictures for an enhanced view)

Once you see this occur, you wait for the price to pull back and then move in the direction of the trend to make your entry. To determine this you can either go to a lower time frame or stay in the current time frame that the entire candle closed completely below or above the moving averages.

The price action does not have to necessarily go back and touch the moving averages (which does occur) but you need to confirm there was pullback in the price and then a continuation of the current trend. Also, read bankers way of trading in the forex market.

In the example below, you can see that the entire candle closed above all three of the moving averages, pulled back in price action, and then continued upward.

I marked where you could have entered this trade. This was the bullish candle after a candle closed bearish.

The reason that I prefer to wait for a break pullback and go is because statistically, the price will mostly always retrace during a bearing or bullish trend.

For a more risky approach to this strategy, you could technically get in a trade right when the price breaks the highest or lowest moving average but this method may cause more harm than good.

The reason is that not every time it breaks these lines it is headed for a strong up or down trend.

Which is why you need to wait for a FULL candle to close above/below these lines and you wait for a pull back and go to enter the trade.

Take a look at this below:

Well, it ? Broke the above the moving average lines.

?A full candle closed above the lines

? Retracement and the continuation of trend = this did not occur so you would not have entered the trade! It did retrace, however, the price did not continue to go in the direction of the trend

We need these three elements for the trade to occur…

Which is why we call this the “Big Three” Trading Strategy

Three different steps to find a trade and execute it.

Stop loss/ Take Profit :

Place your stop loss Below the bottom moving average line. Depending on what time frame you are in will vary on how large your stop is.

Scalpers may have a tight 5-10 pip stop

While day traders will have a 30-50 pip stop

Your take profit is when the price touches the 80-period line. The price crossed this line at +196 pips!

You can tweak this rules as you wish, but we found the best way to push your winners with this strategy was to wait until the price touches the 80-period line.


Big Three Trading Strategy is extremely fun to use and trade with. It is not very messy on your chart because there are only three little lines to look at. We think this strategy has the best three trading indicators that work together. The moving averages are argubly the most popular forex indicators. If you prefer no indicators on your chart, check out our price action pin bar strategy. I look forward to hearing what you guys think of this strategy. Thanks for reading and we hope to see you back!

Please leave a comment below if you have any questions about this big strategies !

Also, please give this strategy a 5 star if you enjoyed it!

(11 votes, average: 3.91 out of 5)

-Trading Strategy Guides

What is the Best Three Trading Indicators? Find out in the strategy here ??

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