Any indicator shows acceptable results at backtesting. An inexperienced trader may even get the impression that they had stumbled upon the Holy Grail. But in real trading, the enthusiasm quickly gives way to disappointment – a seemingly perfect indicator inadequately reacts to the price chart behavior.
The reason for such discrepancy in real trading and indicators backtesting lies in the redraw of a number of indicators. In other words, they simply adapt to the historical data, which confuses the traders.
Profitable Forex indicators without redraw are, first and foremost, arrow indicators. The advantages of such analytical tools include their simplicity and ease of use – the price chart is not encumbered by an abundance of constructions, but displays only the minimum information necessary for the transaction.
As a rule, only up/down arrow is drawn on the chart – this is a signal to open a position. In addition, this arrow can be painted in any color. Visual simplicity does not mean that such an indicator analyzes the market superficially, which is done only in order to simplify the work with the tool.
Popular profitable Forex indicators without redraw
Examples of arrow indicators without redraw may be such tools as T3MA Alarm, WPRSI Signal, Trend Striker Extreme and others. Although visually it is difficult to find the difference between the mentioned indicators, they all use different analytical algorithms.
For example, the T3MA Alarm indicator is based only on 2 moving averages. The signal to enter the market is crossing of the slow MA by the fast. WPRSI Signal indicator is based mainly on the reading of RSI. Unfortunately, often the detailed information about the method of operation of such indicators is missing.
Profitable Forex indicators without redraw are not necessarily arrow indicators, and Trend Striker Extreme is proof of that. The price chart is divided into the areas of upward and downward trends in the form of a histogram. Besides, the strength of the received signal is indicated in %. The disadvantage in this case can be considered a jumble of the histogram lines on the chart. Using other indicators becomes problematic.
In general, the main drawback of custom indicators without redraw can be the fact that information about the algorithm of their work is virtually absent. As a result, the trader is forced to act on their own risk, which often leads to disastrous results.
How to check whether the indicator redraws or not?
Many successful traders either avoid using indicators at all, or use only the indicators present in the trading terminal. If the indicator in the trading system is used only as a supplement for, say, searching for divergence, the effect of redraw on trading is small.
But if the indicator-only strategy is used, the redrawing indicator can put an end to your trading success. Therefore, it is important to be able to determine whether the indicator redraws. You can do this in two ways:
manually – simply by observing the behavior of the indicator. In 20-25 candles it will already become clear whether the indicator redraws or not. It is better to use a minute timeframe so that the check didn’t take long;
using the strategy tester built into trading terminal.
For this purpose, you will need any trading strategy in addition to the indicator. You should run the strategy test and put it on pause immediately after its starts. Then the indicator is added to the price chart, and testing is resumed. In order to be able to track indicator redraw, you need to move the slider responsible for rendering speed to the left.
Profitable Forex indicators without redraw: efficiency comparison
T3MA Alarm, WPRSI Signal and Trend Striker Extreme indicators will be used to compare the efficiency. The testing was conducted in a manual mode on h1 timeframe, the test term was 1 week. The signal indicator was taken as a basis for entry into the market. The position was kept until the opposite signal appeared.
Trend Striker Extreme indicator allowed to make 6 deals over a week, of which only half were profitable. Nevertheless, profit from trading with this indicator was 87 points. Sometimes the indicator allows to catch a decent trend movement in the very beginning.
The arrow T3MA Alarm indicator allowed to make 22 deals over the same period, most of which either closed at zero, or with minimal loss or gain. This indicator also allowed to take almost all the trend movement for the selected time interval for testing. Total profit was 105 points.
WPRSI Signal indicator gave only 2 signals to enter the market over a week. One of them turned out to be unprofitable, but the second allowed to cover the resulting loss and finish the week with the result of about 40 points. Curiously enough, this indicator can show 2 consecutive signals in the same direction.
Features of use of Forex indicators without redraw
As a result of testing, all selected profitable Forex indicators without redraw showed acceptable results. Without further optimization, each of them allowed making a profit within a week. Such discrepancy in performance can be explained by the lack of the parameters optimization.
The effect of redraw is especially noticeable at testing the indicator systems. It manifests itself in the fact that the trading system that regularly brings profit during backtesting fails to provide a similar result in real trading. This deficiency can’t be fixed, you can only refuse the use of the indicators that redraw.
Attention should be paid to the category of arrow indicators, the main advantage of which is simplicity in use – you just need to pay attention to the direction of the arrow. But indicators of this group should be used with caution, as they are ideal for the role of an additional filter for the trading system. They are not recommended for use as the main generator of trading signals.
It can also be recommended to check whether the indicator redraws before using any of them. Such testing will take no more than 20-25 minutes. It should be understood that the indicator without redraw is just a more reliable tool for the market analysis, while the end result will mainly depend on the trader.Social button for Joomla