How Tom Strignano Stripped My Forex Charts Of Lagging Indicators
Most Forex traders are taught to trade Forex the same way … with a trading system that uses the free indicators that comes with most trading platforms. When you look at a trading chart, it is usually full of squiggly lines, colors, arrows and waves. And can you really make decisions with so many conflicting indicators? Come on, don’t lie … your chart looks like a kaleidoscope right now, doesn’t it?
I’ll be the first to admit… I tried many an indicator. Like many of you, I thought I could come up with some magic combination that would make Forex trading simple. But the problem is, all these indicators are lagging indicators. Lagging indicators are really good at telling you what price did in the past. But what I learned from Tom Strignano recently, a retired Bank trader of over 25 years, was that to be successful in Forex, you need to focus on forward indicators. Here is some of what Tom taught me…
#1 Get Rid Of All Your Lagging Indicators
Tom Strignano makes it clear he is no fan of “public” indicators. He calls them public indicators because they are the indicators that come with your trading platform that everyone uses. (Your chart is probably full of them right now… Moving Averages, MACD, Stochastics, etc.). The basic reason Tom hates these indicators is because they are LAGGING indicators.
Lagging indicators tell you where the market has been… not where it is going. And since past movement does not guarantee price will move in the same direction, these indicators have limited value. And I know, this might be a tough pill for some of you to swallow.
Tom Strignano believes success in Forex comes more from reading PRICE ACTION than anything an indicator can tell you. Price Action, or what price is doing right now, is the best way to look at the market. And through some proprietary calculations, Tom can figure out where price is likely to go. And focusing on these forward indicators is what sets you apart from other traders. (You know? The ones losing money!)
#2 Start Using Forward Indicators
OK, what is a forward indicator?
Forward indicators are levels where price is most likely to go. It looks into the future and predicts levels where price is drawn to or rejected from. Do you think you would be a better Forex trader basing your trading decisions off this valuable information?
You might be familiar with some of these like Pivot Points and Support & Resistance Levels. But the difference with the levels you are probably used to and the ones Tom uses is that his are calculated from a proprietary formula he created while working as a Bank Trader. His levels look at levels the Banks look at, which is the most important levels if you what to know what the big boys are doing.
#2A Market Exhaustion Points
Market exhaustion levels are another calculation Tom uses. It predicts areas where price is most likely to lose momentum. Make sure to pay attention to what price does at these areas. If price starts to stall, you might want to exit the trade, move your stop loss up, take partial profit, etc. But the point is, without these calculations… you wouldn’t know you were supposed to pay attention.
How many time have you placed a trade only to see momentum die out shortly after? You probably just traded into one of these exhaustion levels. Wouldn’t your trading be better if you knew these levels in advance? You see… Forward Indicators!
#2B Trend Reactionary Numbers (TRN)
Trend Reactionary Numbers are the most important price levels Tom calculates. When price bounces off one of these levels … you can be pretty sure it is heading for the Trend Reactionary Number below. When price breaks through one of these levels … you can be pretty sure price is going to move to the next one. These major target areas are incredible because they provide targets for profits of HUNDREDS OF PIPS. When you see these TRN’s on your chart, and how price reacts to them, you are going to be amazed.
Final thoughts…
The point is, if you want to make consistent profits as a Forex trader, you need to start looking at the market like a professional trader. This means paying attention to key areas provided by forward indicators. Other traders are only looking at what price has done in the past … and as a result, make poor trading decisions. What I learned from Tom Strignano is you need to use forward indicators to plan your trades and make decisions based on what price action does at these areas. Successful traders don’t look into the past, they look forward and therefore make higher profits.
This is why I stripped my charts of unnecessary lagging indicators. They are now much cleaner and easier to read price action. Now they basically have forward indicators at major decision making levels … which has effectively become a map to higher profits. In the end, forward indicators and price action are the real edge of a successful Forex trader.
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