Indicators are an essential part of technical analysis, along with chart patterns, candlestick patterns and simple trendlines. There are various indicators developed for trading forex. Each indicator is suited for certain market conditions. There are indicators that are useful for trading ranges, there are indicators for trend trading, there are indicators that help traders better time entries and exits.
In terms of trading signals, Forex indicators are grouped in two categories: leading and lagging. Leading indicators are giving buy or sell signals before trends or reversals start. Lagging indicators simply display what has already happened. Lagging indicators make analyzing past price action easier.
There’s one more major difference between indicators that is often ignored and highly essential. There are indicators that repaint and indicators that do not repaint, Forex price action. Repainting simply means that the indicator keeps changing its value after the candle closes. Should you use repainting indicators? What’s important to know before selecting an indicator? What’s the difference between repainting and non repainting indicators? Which are the best fx indicators that do not repaint? Let’s dive deep and find answers to these questions in this guide.
What is the difference between repainting and non-repainting Forex indicators?
As already mentioned, fx trading indicators that do not repaint, do not change their value once they are set. Which makes predicting future market moves much easier for intraday traders. Intraday traders are more focused on current events than the past price action. Position and long term traders have the luxury to wait and see how the final form of repainting indicators.
Forex indicators that do not repaint produce more precise buy and sell signals, as they do not change to fit the narrative later.
Why do some indicators repaint?
Before we answer the question, please note that not all indicators that repaint are scams or useless. Some repainting indicators are highly useful for analyzing past performance.
There are various reasons why indicators repaint:
- Developers have made them to repaint to make them look more appealing
- They repaint because the indicators are based on candle closing prices
- Some indicators repaint to make past chart analysis easier
When developers create indicators that repaint to create an illusion of providing the best trading signals, it’s deceitful. These indicators show traders that they can produce great trading signals, while in fact, they are useless. It’s important to note that there are many scams and money pits you need to avoid when starting the trading journey. Not all algorithms and indicators that you buy in the market work properly. Make sure to purchase the ones from trusted developers. It’s critical the developers to have disclosed whether their indicators are repainting or not, otherwise it’s considered scamming.
Some indicators repaint because they are designed to integrate candle’s closing prices. Indicators’ value change as unfinished candle price changes. And therefore, if you are planning to trade using these types of indicators, you should only take into account the values that have appeared after the candle’s close.
Some indicators repaint not to scam, but to help analyze past price action. For example, Moving Mini Max repaints but, at the same time, helps traders analyze the charts better.
How to select the best Forex trading indicators?
Whether you’re looking for indicators that repaint or the indicators that do not repaint in Forex, it’s important to note that there’s no one indicator that’s the best. Each indicator is built to serve a specific purpose.
For trading ranges, there are mostly oscillating indicators. Oscillator indicators show overbought and oversold conditions and produce signals that predict reversals.
For trading trends, there are moving average indicators. Moving averages show potential trend joining signals.
Volume indicators help identify increased trading activity and potential for trend continuation or reversal. For instance, when a new trend is established and is forming while trading volume is increasing, there is a change that the trend will continue. If then volume gets decreased, it means that traders are losing an interest and reversal might happen.
Leading indicators help traders by providing trading signals. Leading indicators are predictive in nature, and they predict establishment of new trends or trend reversals. As for the lagging indicators, they display what has already happened. Lagging indicators improve visualization of what has happened.
Forex indicators that do not repaint help day traders by producing trading signals that will not be changed later. Indicators, that repaint as prices move, are useful for analyzing past performance.
Once, you’ve selected the indicators you want to use in your trading, it’s always best to test them before risking your capital. There are various ways that you can test your indicators. You can demo test them, open small trading account and test them live. Or you can use your trading platforms. Most trading platforms enable traders to test their trading strategies and indicators automatically. In case you are using MetaTrader platforms, you can use strategy tester for that purpose. It’s essential to test your strategy before going live and risking your capital. A well tested indicators can increase your confidence and also show you where is the best place to use it. As already mentioned, each indicator should be used in a specific environment.
Forex trading indicators that do not repaint
Be noted that technical indicators fail to incorporate fundamental information such as political and economic events. And therefore, it’s always a good idea to keep an eye on the economic calendar while you’re trading using indicators.
Now that we’ve discussed various types and uses of indicators, it’s time to show the indicators that do not repaint examples.
Stochastic Relative Strength Indicator (RSI)
RSI is one of the widely used fx indicators that do not repaint. The indicator was developed by Welles Wilder in order to determine the strength of current market price action. The indicator used to identify overbought and oversold market conditions, and it’s placed below price chart. The indicator is usually built-in in various trading platforms and traders do not need to purchase them. This is an oscillator that has 0–100 levels. RSI calculates the speed and fluctuations in price movements. In general, Relative Strength Indicator is used when trading ranging markets. The indicator fails to produce reliable trading signals when markets start ranging.
In order to trade ranging markets using the Stochastic RSI, you can sell whenever the RSI line gets above the overbought level and buy whenever the line gets below. Typically, RSI levels are set at 80 and 20 levels. However, they can be changed based on your preference. For more precise trading signals, traders set the numbers at 90 and 10. While some prefer 30 and 70 as RSI levels. Keep in mind that the higher the numbers, the less trading opportunities you’ll get.
RSI can be coupled with volume indicators and other trading strategies. Keep in mind that the indicator is made for ranges and fails to produce reliable trading signals when markets start ranging.
The exponential moving average (EMA)
EMA is also one of the widely known Forex indicators that do not repaint. EMA is placed on the chart, and it’s generally used for trading trends.
The exponential moving average EMA indicator is very similar to the simple moving average SMA. The only difference between the two is that the EMA gives more importance to recent price moves.
The EMA is used for trading trends. The indicator fails to produce reliable trading signals when markets are in range.
Traders usually use various EMAs time periodwise simultaneously to trade trends. The most widely used EMA periods are 20, 50 and 200. Time periods are easily adjustable once you add the indicator on your chart. 20 is a short length period, 50 – medium and 200 – long. You can select different periods, it’s totally subjective, however, that’s what most traders base their analysis on, and it’s always better to use what majority of other traders are using. The reason is quite simple, yes, to make money, you need to be ahead of the crowd, but you should also avoid trading against the crowd. Trading decisions determine prices on securities. And generally, most traders avoid placing orders against strong trading signals, which is why the most popular indicators and patterns tend to work.
As already mentioned, EMA is a trend trading indicator, and it helps traders find trend joining opportunities. Traders often use the combination of the three EMAs. When 20 period EMA gets crossed over by 50 or 200 period EMA, it’s a signal for going long. In contrast, anytime we see the 20 EMA got crossed beneath by 50 or 200 EMA, it is a signal for opening a short trade or getting out of a long position.
In case you wish to avoid the three EMA strategy, you can simply use a single EMA. The way it is used by traders is that they stay in the long position as long as the price remains above the chosen EMA level.
Auto Fibonacci is one of the indicators that do not repaint in Forex. Traders are widely using Fibonacci numbers for spotting potential retracement levels. These numbers are 23.6%, 38.2%, 50%, 61.8%, and 78.6% and 100%. While it’s true that 50 is not a Fibonacci number, it is widely used along with the others in trading. Fibonacci indicator nobles traders to connect two point of a price swing manually and the formula automatically calculates potential retracement points automatically. What’s great about Auto Fibonacci indicator is that, once you open the indicator, you don’t need to search the price swing, the indicator automatically displays the levels.
In trading, security prices never move in straight lines. Prices go up and down in a zigzag like movements to reach from point A to point B. Prices move from significant levels to significant levels. These levels serve as potential for entering the trades, potential for exiting, and give trades clues on stop loss order placement. The Fibonacci levels are used for the same purpose.
RSI Based Automatic Supply and Demand
The last fx indicators that do not repaint that we’re going to discuss in this guide is RSI Based Automatic Supply and Demand.
Supply and demand is highly important when making trading decisions. On charts, supply and demand can be visible as aggressive selling or aggressive buying. Aggressive buying means that smart money (institutions) are investing. And vice versa. RSI based supply and demand shows levels where RSI indicator goes over 70 and below 30 levels. It is a better visual representation and traders can easily see where the overbought and oversold conditions were spotted historically. These zones can be used as significant support and resistance areas.
However, to trade using this indicator, it’s not enough to place it on your charts. It’s essential to develop a supply and demand trading strategy that uses RSI levels. The indicator simply makes RSI overbought and oversold levels more visible.
The main takeaways
To sum everything up, there are various indicators. There are indicators that are best for trading ranges and there are indicators for trading trends. It’s critical to use each indicator as it was intended. Forex indicators that do not repaint do not change values after price changes. There are various reason why some indicators repaint. One possible explanation is that some developers intentionally make them repaint to become more appealing for customers when marketing. Some indicators repaint to make past chart analysis easier. Some repaint because the indicators are based on candle closing prices. When using indicators, it’s important to note that they are purely technical and technical traders should always keep an eye on the economic calendar. Some of the best indicators that do not repaint in Forex are: Stochastic Relative Strength Indicator (RSI), The exponential moving average (EMA), Auto Fibonacci, RSI Based Automatic Supply and Demand. The RSI indicators are for trading ranges. While moving average indicators are for trading trends. As for the Fibonacci levels, the indicator is automatically placing levels on a price swing, that makes trading even easier. The levels serve as potential retracement points. Forex trading indicators that do not repaint are highly useful for intraday traders because they base their decisions on ongoing changes. Indicators that repaint can also be useful, as we’ve already mentioned, they improve analizing past price movements.
FAQs on Forex indicators that do not repaint
Are indicators that do not repaint reliable?
Depends on the indicator. There are Forex trading indicators that do not repaint and work perfectly, and there are indicators that fail. When selecting an indicator, it’s critical to do your research not to get scammed. In general, repaint indicators are highly useful for intraday traders and some of them are highly reliable.
Should you use indicators that do not repaint in Forex?
Yes, if you are a technical trader. You can use both repainting and non-repainting indicators. But remember, each indicator should be used in a context and for a specific purpose. Repainting indicators fail to give clues on what is currently happening in the market as they change along with the prices, however, they might be highly useful for analyzing past performance.
Are Forex indicators that do not repaint profitable?
Depends on the indicator and the usage. In general, yes, non-repainting indicators are high useful for intraday Forex traders. At the end of the day, profitability depends on how you use your indicators, how you conduct market analysis, manage trades and your emotions and have risk management strategies in place.
Are indicators that repaint useful?
The degree to which an indicator is useful or not depends on the market conditions, time frame and trading instrument. While it’s true that fx indicators that do not repaint are highly useful for intraday traders, repainting ones can be used for analyzing the past. There are some indicators that are based on candlestick closing price. As a result, they change their value as candles get closed. Some might consider such indicators as repainting ones, however, many of these indicators are highly useful. To intraday using such indicators, you can simply ignore the signal until the candle gets closed.
How to select the best indicator for Forex?
Picking the best indicator depends on many factors. There are trend trading indicators, there are range trading indicators. There are leading indicators that produce trading signals and predict reversals or starting of a new trend. What’s more, there are lagging indicators that are used for making past market performance visually easier to analyze. And lastly, there are indicators that repaint and the ones that don’t. When you are not sure which indicator to use, it’s always best to test them in demo accounts or test them live with micro accounts so that you know you are not risking much. There’s also a possibility of automatic testing trading indicators using trading platforms.