Could a Trader Using Only “Old” Technical Indicator be Successful at the Forex Market?

Abstract

The use of technical analysis indicators for trading is widely known and discussed. Quite a large number of indicators and the long time period of their usage provide opportunities for creating profitable and successful trading strategies. On the other side technical analysis indicators were constructed for the stock market and therefore to traders on the Forex market it places the question. Can be a strategy based purely on technical analysis indicators profitable on the market with high volatility? Do we use the old, proven indicators, or use the newer ones? Will indicators generate good trading entries in time of crisis? The paper tries to find answers to some of these questions. On the basis of Moving Average Convergence Divergence (MACD) indicator, the trading strategies have been developed and back-tested at the Forex market with different timeframes. An important element of the research is to distinguish the time period of the crisis and beyond the crisis period and tested success of created strategies at the major, most traded currency pair. At the end of the paper the performance and profitability of the created strategies are discussed.