Lucky Reversal Indicator
Trend reversal in the Forex market happens all the time. As long as there are trends, there will always be reversals. Many tools and strategies for trend and trend reversal trading are based on this simple concept. Now the only question is how can a trader use the right tools to catch reversals and trade with the trends. The Lucky reversal indicator is one of many reversal indicators.
But it has some unique features that make it different from other forex trend reversal indicators.
What is a good reversal indicator
The Lucky reversal indicator lives up to its name: it tells you when the trend has changed from up to down or from down to up. It gives signals in the form of blue and red arrows, each of which is followed by wavy horizontal lines. The blue arrow marks the start of an uptrend, while the red arrow indicates a market reversal to a downtrend.
The major flaw of the Lucky indicator
The successful reversal indicator is different from many other trend reversal indicators. The reason is that this is a lagging indicator, so a trader is unlikely to be able to trade with it on reversal breakouts.
Many traders have become frustrated trying to use the indicator to detect the start of a reversal, and you can’t blame them for trying. If you backtest the indicator, you will find that bullish and bearish signals are right at the lowest or highest reversal points of major trend reversals. See an example in the image below. You will notice that the price will reverse as soon as the arrow appears.
However, when testing the indicator in a live market, you will find that bullish or bearish signals only appear after the market has completed a reversal. The reversal arrow appears on the chart only after the reversal is confirmed. This shows that the Lucky reversal indicator is lagging behind.
Strong side of the Lucky Reversal indicator
The main weakness of the Lucky indicator is its strength. Since it is late, it is almost impossible to catch reversals with it, but it can be used to confirm trades in an emerging trend. For example, you can trade an uptrend that occurs after the market has completed a reversal from a downtrend to an uptrend.
Lucky Reversal Indicator Trading Strategies
The best way to trade with the Lucky Reversal Indicator is to include it in your trading system where you can use it in conjunction with other trading tools. Other trading tools in the strategy can be indicators or market structures (support and resistance, candlestick patterns, chart patterns, etc.).
To help you understand how to combine the Lucky indicator with other indicators, we will use the indicator with the Moving Average indicator to form the first trading strategy.
Trade Management
For each of the trading strategies, the best way to set the take profit size is to set target prices. Do not wait for any of the indicators to give the opposite signal before exiting the trade.
And when you want to set your stop losses, remember not to risk more than you can afford to lose. The rule of thumb is not to risk more than 2% of your capital on a trade. With this in mind, you can use any method you are familiar with to set a stop loss.
The advantage of the Lucky indicator is that once it draws wavy lines, the price rarely crosses over to the other side. You can also use this to set your stop losses, but this may not always give you an acceptable risk/reward ratio.
Who is the good reversal indicator best for?
The Lucky reversal indicator is best for intermediate and professional traders.
Novice forex traders who understand what lagging forex indicators are and know how to trade with them can also use this indicator, but with caution. To get the most out of this indicator, they may first need to know how to identify currency trend reversals.
In addition, the trend reversal indicator is best suited for trend and trend reversal traders.
