If you have ever used technical indicators for trading, you know that it’s not easy. The most common issues are selecting suitable technical tools and choosing indicator settings. Considering that there are over 100 technical indicators available on the trading platform, picking the right tools and indicator settings on IQ Option might seem complicated. Is there such a thing as the perfect indicator settings for indicators? The answer is both yes and no.
Let’s take a look at the main principles you may consider when selecting technical analysis tools and choosing indicator settings. Here are 3 main steps to gather the necessary information about indicator settings and make an informed choice.
1. Learn about indicator types
Before deciding on the indicator settings on IQ Option, you might want to understand their main purposes. What’s the “special power” of the indicator that you are about to use? Can it help achieve your goals?
All indicators are split into several categories.
- Momentum indicators, like the Awesome Oscillator or MACD, may assist in tracking price movements and looking for potential price reversals.
- Trend indicators might help identify the direction of the trend and filter out the price noise. The most well-known indicators of this type are, for example, the Moving Average, KDJ and Ichimoku.
- Volatility indicators are aimed at measuring the speed of the price change. If the price changes rapidly, the volatility is high, and vice versa. Such indicators as Bollinger Bands or ATR may help determine the potential risks involved when making deals in the current trading conditions.
- Volume indicators, as follows from the name, represent the volume of deals executed on the CFD asset. The volume indicators available on the IQ Option platform may help a trader understand the demand of the CFD asset and understand whether a reversal of the trend might be expected soon.
As you see, there are plenty of indicators to choose from. If you are not certain how to combine different indicators, read the article Top-3 Indicator Combinations. Learning about the purposes of different technical tools is crucial. So you may find it useful to do it before experimenting with indicator settings on IQ Option.
2. Test the default indicator settings on IQ Option
Once you have decided on the indicators that suit your approach, it is time to apply them to the chart. One sure way to get the indicator to work correctly is to use the default settings. In fact, many trading methods are based on the default indicator settings on IQ Option.
It is important to mention that the applying default settings does not make the indicator less useful or precise. Moreover, it might be preferable to leave it with the standard settings if you aren’t certain how to adjust the settings correctly.
However, there are situations where the indicator’s work might be enhanced by adjusting the period, for instance. More experienced traders may test different indicator settings on IQ Option in order to come up with the configuration that works best for them.
3. Choose indicator settings for your trading method
Keep in mind the basic rule of indicator settings: decreasing the period of the indicator may potentially increase its sensitivity to price changes. At the same time, by increasing the period, you are decreasing its sensitivity, making it more likely to filter out minor price fluctuations.
Short-term trading methods
Short-term traders might adjust the settings to be more sensitive to changes to track even minor price fluctuations. However, such settings may offer more false indications, so it is necessary to double-check all indications and be prepared to manage potential losses. No indicator settings can guarantee a 100% success rate, so consider applying suitable risk-management tools to protect your capital.
Long-term trading methods
At the same time, long-term traders may be looking for less frequent, but stronger price swings. So they might choose indicator settings with larger periods. This way, they may be able to spot major changes in the trend. However, as large price swings don’t happen frequently, it may take some time.
To choose the appropriate indicator settings on IQ Option, traders should understand how indicators work. Learning about the functions of a certain indicator is often more important than adjusting its settings. The key is to know what goal you’re trying to achieve by using these specific tools and applying suitable indicator settings.
If you understand the purpose of the chosen technical analysis tools, experimenting with indicator settings might help you get closer to achieving your trading goals. While all indicators work just fine with their default configurations, more experienced traders may try adjusting indicator settings to boost their approaches.
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