Forex Speedometer

A Forex speedometer is a tool used in technical analysis to measure the strength of a currency pair’s trend. It is typically used by traders to determine whether a currency pair is overbought or oversold and make informed trading decisions based on the readings. The speedometer is calculated using various technical indicators, such as the Relative Strength Index (RSI), Moving Averages, and Bollinger Bands.

What is the Forex Speedometer?

The Forex Speedometer indicator is intended for traders who do not want to wait for long periods of time for proper market setup. It was designed for traders who want to jump in and trade for profit right away. This indicator will draw oversold and overbought zones automatically which the traders could use to inspire their trade decisions.

Setting up the Forex Speedometer
Setting up the Forex Speedometer

Forex Speedometer Strategy

When the tick chart indicates an oversold zone, traders can spot early signals of an impending upward rise. The speedometer should read at least 2.3 ticks per second. You may consider exiting a buy trade when the tick chart shows an overbought zone and early signals of a likely down move. You may want to wait until the speedometer reads less than 1.5 ticks per second.

On the other hand, when the tick chart indicates an overbought zone, traders can spot early signals of an impending downward move. The speedometer should read at least 2.3 ticks per second. You may consider exiting a sell trade when the tick chart shows an oversold zone and early signs of a possible up move. You may want to wait until the speedometer reads less than 1.5 ticks per second.

Buy Signal

The following could be your checklist for a buy trade:

  • When the indicator signals an oversold situation.
  • When the speedometer reads 2.3 ticks per second or higher in a bullish trend.

Once these events occur:

  • You could open a buy position after you confirm your entry with bullish candlestick patterns.
  • You could set your stop loss just below the nearest swing low.
  • You could set your take profit at the nearest resistance zone, or you could exit trade when the indicator signals an overbought situation.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Forex Speedometer Buy Setup
Forex Speedometer Buy Setup

Sell Signal

The following could be your checklist for a sell trade:

  • When the indicator signals an overbought situation.
  • When the speedometer reads 2.3 ticks per second or higher in a bearish trend.

Once these events occur:

  • You could open a sell position after you confirm your entry with bearish candlestick patterns.
  • You could set your stop loss just above the nearest swing high.
  • You could set your take profit at the nearest support zone, or you could exit trade when the indicator signals an oversold situation.
  • For good risk management, I would only consider trades with a risk to reward ratio of at least 1:2.
Forex Speedometer Sell Setup
Forex Speedometer Sell Setup

Forex Speedometer Pros & Cons

Pros

  • The Forex Speedometer could help traders identify potential overbought and oversold levels on their charts.
  • This indicator may be able to give idea on a currency’s strength or weakness at a given period.

Cons

  • The Forex Speedometer may provide a limited perspective on the market.
  • Forex speedometers are based on mathematical algorithms, and as with any indicator, they can produce false signals.

Conclusion

The Forex Speedometer Indicator could be a good addition to your trading toolkit. A decent forex indicator may boost your chances of success. Nonetheless, keep in mind the importance of maintaining realistic expectations. Forex Speedometer is not capable of generating 100% correct indications. As a result, this forex indicator occasionally generates erroneous signals. Its performance will be highly variable depending on market conditions.

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