Can You Profit in Trading with Arrow Indicators?

Posted by Susanto on July 11th, 2019

Forex trading has become one of the easiest ways to earn money. Many people are attracted to it because of how easy it is to engage in the trade. All you need is a smart-phone, internet connection and starting capital. Many people view it as a way of making quick and easy money. However, this is not always the case.

Forex trading is a risky venture. The market is subject to constantly changing prices. This makes it quite easy to make losses if the prices shift unfavorably once you have placed your trade. This is where indicators come in handy. They are tools that attempt to predict future changes in the currency markets, based on previous trends. Indicators greatly influence a trader’s decision. If the indicators predict a forthcoming increase in price, they will buy. Conversely, they will sell in case the indicator predicts a likely drop in the price of a currency.

But how effective are indicators? In this article, we will narrow our focus to mainly arrow indicators. Can they assure you of a profit? Are they the best indicators for any forex trader? To answer these questions, we have to get a deeper analysis of the pros and cons of arrow indicators in Forex trading.

The advantages of Forex Arrow Indicators (The Pros)

Let us dive right into some of the advantages first:

1.Easy to interpret

To be honest, line graphs and data curves are not the easiest tools to interpret. Other indicators such as the stochastic indicator that employ graphical tools to forecast price changes are quite difficult to interpret especially for newbie traders. On the other hand, arrows are pretty straight forward. If the arrow is pointing up, it is an obvious indication that the price is likely to go up. The converse is true as well.

Various arrow indicator tools are customized in their own unique ways. Some of them are coded with colors to show the frequency of price fluctuations. For instance, a blue arrow could indicate a chance to open a long position. This means that the price is likely to maintain the indicated trend for a longer period of time. On the other hand, a red arrow could signify a short opening. This enables you as the trader to make an appropriate decision on whether to take the risk and place your trade or simply wait for a more suitable moment.

2. They are combined indicators

Arrow indicators are generated based on a wide range of considerations. They take into account the volatility of prices. They are also based on past trends which tend to recur under certain conditions or at specific times. Factors such as demand which often results in too much of a currency being bought or sold also affect arrow indicator predictions. Essentially, arrow indicators are a medley of the relative strength index, the Bollinger volatility indicator, the stochastic indicator, and many other price index indicators.

This is exactly what makes them a trustworthy tool to predict trends in Forex trading for many traders. All these complicated indicators are integrated to make up one simplified tool. However, this is not to say that they are perfectly effective. They are credible to some extent, but not entirely.

3.Confidence

An arrow indicator has some level of certainty attached to it as compared to a line graph. The arrow is either pointing up or down. This is in contrast to a graph that rises at some points, flat-lines at others and nosedives at other points. With an arrow, the trader knows exactly what to expect. There are no intermediate trends portrayed that would otherwise cast a shadow of doubt in the trader’s mind. This is one of the main reasons why arrow indicators are commonly used in long-term forex trades.

The Disadvantages of Forex Arrow Indicators (The Cons)

Let's take a look at some of the disadvantages you will experience if you are trading with arrow indicators:

1. Repainting

Arrow indicators are not always accurate in their predictions. In cases of wrong predictions, some arrow indicators alter their prior predictions to depict a perfectly correct prediction history. They get rid of all wrong predictions they displayed before. This is obviously a scamming strategy by their developers. Many traders have fallen prey of such illegitimate activity.

It is quite hard to find an arrow indicator that is free of repainting. Arrows are quite easy to repaint because of their small size as compared to line graphs. As a matter of fact, some traders, especially novices, barely realize when it happens.

However, not all repainting arrow indicators are meant to defraud traders. Some indicators repaint their values to give a clear picture of the prevailing price trends in the market. If this is the case, the indicator software should make the trader aware of this in the user’s terms and conditions.

Not every arrow indicators are repaint, but only less than 20% that are not. One of the famous arrow indicators that are not repainting is Forex Pin by Dennis Buchholz. This indicator got five stars in ForexPeaceArmy, the biggest forum on Forex product reviews by real users.

2. Slippages

As mentioned earlier, like any other indicator, arrow indicators are not that accurate. Sometimes they give predictions that are extremely contrasting to the prevailing trends. The disparity between the prevailing price and the predicted price is referred to as slippage.

Arrow indicators are not very responsive in a highly volatile market. They are therefore subject to a high level of slippage in such conditions. This is the reason why they are generally more suitable for medium and long-term trades and not short term trades. So if you are into scalping, it is not advisable for you to put your trust in an arrow indicator.

Obviously, it would be unwise to rely on a single type of indicator in your trades. Besides an arrow indicator, you can have a couple of other indicators which will enable you to make comparisons on the predictions.

Having looked at all this, can you profit in forex trading using an arrow indicator? To some extent, yes you can. Legitimate arrow indicators are credible to a certain level. However, do not forget the fact that the expectations do not always come true. The indicator only gives a statistically determined rough estimates based on preceding trends.

Past trends do not always have a direct impact on future trends. The Forex market is all about taking risks. The market is prone to unforeseen fluctuations in price. Such fluctuations are determined by factors beyond what the arrow indicator can consider.