Forex Indicators Vs Chart Patterns – Which is Best?


In the field of FOREX trading there are two main approaches dominating the technical analysis method: indicators and chart analysis. The questions, which is better and more efficient in generating trading signals, is often asked. After reading this article, you would have a better point of view over this subject.

Fact #1: Indicators are objective
While chart patterns are obscure in their identication, interpretation and trading, Indicators are very objective in generating trading signals and are usually understandable for beginner traders. Chart analysis requires years of experience to be done properly and with profitable expectancy. On the contrary, indicators need not such experience and are easy to understand and trade.

Fact #2: Indicators produce more signals
Indicators gives signals very often and produce many profits opportunities for traders, while patterns are relatively rare. Chart patterns occur every few days or weeks while indicators gives signals in any timeframe and any currency. Even the most popular pattern, the Double Top, occurs every few days and the trader which trades it is passive in most of the time.

Fact #3: Indicators can be confirmed
Chart patterns are stand-alone analysis tools which are hard to confirm using other tools. Once a trader has identified a pattern, there are very few tools which help him increase the win rate and profitability. On the other hand, indicators can be confirmed by many other technical tools and by this their signals become more powerful and profitable.

Fact #4: Indicators can be automated
Prudent traders can create a trading system that automatically trades their indicators. This cannot be done with Chart Patterns as they are hard to identify and trade automatically. This allows the trader to save time and effort while a robot trades automatically, instead of waiting for days for illusive chart patterns.

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