Extremum indicator is a forex trading indicator. It is a dynamic indicator and it might be quite confusing for the beginner traders when they look for the first time. But no worries! I have made the job easier for you. I will tell in this article how to do that. First of all, when talking about Extremum indicator this indicator can be used to catch the up and down swings of the market. The different oscillators and different histograms of different colors can confuse you sometimes so we will only focus on few things.
The Extremum indicator might be inappropriate to use in short term time frames like 5-minute, 15-minute, etc. This indicator is appropriate to use in H1, H4, and daily time frames.
When you install Extremum indicator in your trading platform, your chart should look like this:
- Extremum indicator
Extremum indicator consists of two oscillators. The oscillator in the positive territory is red and the oscillator in the negative territory is green. There are also histograms used in this indicator. The pink histogram bars indicate the buying signal while the yellow histogram bars indicate the selling signal. To makes the things look easier you can ignore the green bars of the histogram.
Our all time rule applies here as well. Buy only in the uptrend market and execute sell position only in the down trending market.
When you execute the trades with Extremum indicator you should be extra careful as there are many chances of making wrong trades due to the complexity of the indicator. To be honest this forex trading indicator doesn’t generate crystal clear signals. Different histogram bars which appear inconsistently on the main chart are the main reason for the confusion. However, you can stay away from this confusion by practicing a lot.
Buying Conditions Using Extremum Indicator.
- The market should be up trending.
- The pink histogram should appear in the Extremum indicator.
- Place your long position as soon as above conditions are met.
- Place your stop loss just below the recent swing low.
- Take your profit when the pink histograms disappear.
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Selling Conditions Using Extremum indicator.
- The market should be down trending.
- The yellow histogram should appear in the Extremum indicator.
- Place your short position as soon as above conditions are met.
- Place your stop loss just above the recent swing high.
- Take your profit when the yellow histograms disappear.
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