Using the XMaster Formula Indicator Effectively

Most technical indicators go by very mundane names, or even mere strings of letters like RSI or MACD, but there’s one that announces itself with a note of flare: the XMaster Formula Indicator Forex (the last word, understandably, is only appended when we’re dealing with currencies). Becoming a true master of technical analysis requires consistent and diligent practice, not the skill to employ a single indicator. This one’s name, then, should be taken with a pinch of salt. 

More than that: We don’t really know how this indicator works because it’s formula, like the formula for Coca-Cola, is a trade secret. This need not be any sort of problem, though, just as we may enjoy the taste of Coca-Cola without knowing exactly how to prepare it. The main thing is learning how to use the XMaster indicator to improve the outcomes of your online trades. 

The XMaster Formula Indicator is one of the indicators used in technical analysis for a variety of assets including forex pairs, commodities, and stocks. Technical analysts are professionals in the business of poring over price charts until they spy precious signals of what the security may do next. This could be done through identifying patterns in the price movements and matching them up with the patterns catalogued by experts in the field. These go by strange names like Abandoned Baby and Hanging Man and tell us, within a certain range of probability and based on historical market behaviour, what traders may do next. 

Other technical indicators compare recent price movements with more distant ones in order to flush out changes in trader sentiment. Perhaps traders have turned bullish on the security in the last week, and if we confirm this by recognizing higher trading volume, we may have reason to believe in an upward price shift just around the corner. This would allow us to open a deal in the direction of the new wave before it gets going, thus reaping the maximum earnings from its movements in coming days or weeks. 

The XMaster Formula Indicator is made up of two or three known indicators, notably the RSI (Relative Strength Index) and the MACD (Moving Average Convergence Divergence), which are standard tools in any technical analyst’s kit. Thus, we know something about how the XMaster generates its buy and sell signals. Let’s start by looking at how the RSI and MACD go about their job, and then move on to the practicalities of using the XMaster Formula Indicator on your trading platform.  

RSI and MACD

These two cousins belong to the family of momentum indicators. Your Porsche may be speeding along at 120 km/h right now, but if your average speed over the last twenty minutes has been 180 km/h, there is a basis to deduce you are slowing down – maybe even to a stop. Once you do, you may turn around and drive in the opposite direction. For those who may be interested in this prospect (say, the traffic cops), we can appreciate the value of knowing your average historical speed in addition to your current speed. In a nutshell, the reason is that it lends it itself to suggestions of what you may be up to. 

The same is true of momentum indicators. They have the power to tell you that, although a security is careening along to higher and higher price levels, it’s time in the sun has essentially ended. All that buying energy has burned itself out because the asset is now overbought and due for a correction. 

The RSI does this by comparing current prices with price levels in the recent past. If prices appear significantly higher than historical levels, there is reason to believe the security is overbought and due to slide. Gazing down at the RSI oscillator below your price chart, readings of 70 or higher send us this bearish signal. By contrast, readings of 30 or below suggest oversold condition, which are bullish in significance. 

The MACD attempts to do exactly the same task, but in a slightly different way. This is by comparing a 12-day moving average (MA) for the security with a 26-day MA. A moving average is just a constantly updated average for prices over a given period. When prices are rising faster in recent days than more distant ones, it could mean prices are overextended. In this case, the forecast is sent by means of a signal line that accompanies the MACD line on your chart, rather than through a numerical reading. 

Enter XMaster

Many traders use both the MACD and RSI together to improve the quality of the trading signals generated. Sometimes, the results are pleasing, but, at others, less so. Specifically, it can happen that your RSI is reading over 70, signaling a sell deal, while your MACD is telling a story of robust buying momentum. This leaves traders throwing up their hands in despair. In addition, the RSI has a reputation for malfunctioning in strongly trending markets, which can be irritating.  

Traders testify that the XMaster Formula Indicator outdoes the RSI in trending conditions, which may be one of the reasons why it was developed. Still, it has its weaknesses too. Some say it loses its head when volatility is high, or trading volume is low. All voices agree that the effectiveness of the XMaster formula is directly related to a trader’s skill in interpreting its signals in the light of the dominant trend of the moment. It’s a general rule of trading that indicators should not be looked at in isolation, but in the context of actual price action and the messages sent by other indicators. Don’t set out on a search for a stand-alone indicator that can tell you what to do in every scenario without reference to anything outside itself, because it’ll be in vain. 

Using the XMaster Formula Indicator

The XMaster may be the most user-friendly indicator of all. You won’t need to make complicated mathematical calculations of any kind to employ it in your online trading. Let’s take a look at Mr. XMaster in person to see why. 

That’s him, oscillating and changing colours in a chameleon-like fashion at the bottom of the chart. Notice the little yellow arrows punctuating the shifts from green to red, and vice versa. More particularly, note that, had you followed those signals at each juncture, (downward arrows signaling prices will dip, upward arrows predicting an uptrend), you would have traded in the direction prices ended up moving in each case.  

And the rules for applying the XMaster formula really are as straightforward as the arrows suggest. Open a “buy” deal when you see an upward-pointing yellow arrow appear, and a “sell” deal when the arrow points down. In the case of a bullish deal, the place to put your stop loss is at the level of the last trough. When going short, place it at the level of the most recent peak. Keep your long position open until you see a downward arrow appear, and retain your short position until you are faced with a new upward arrow. That’s it. 

As you can see, the XMaster Formula Indicator is suited to traders who value simplicity and who work well with visual signals. There isn’t much of a leap between seeing the patterns on the chart and knowing what to do about them. The green and red waves are intuitive in conveying their meaning. There isn’t a need to, firstly, get a numerical reading from the indicator and, secondly, interpret the number, as with the RSI. Nor do you need to watch out with a hawk eye for places where the signal line crosses above the MACD line, as in the case of the MACD indicator.  

Wrapping Things Up

The XMaster Formula Indicator can assist you in identifying points of reversal in a given price trend, giving you a leg up on the short trade you want to open while prices are still rising. It can also be of use if you are seeking to affirm a pre-existing trend before jumping on that train. Thus, when prices have been plummeting, you can benefit from all the downward momentum that has already built up. 

Those who trade in the short term will find the XMaster is a good partner. It works particularly well on the scale of one hour, but also helps out when we extend the period to four hours, a day, or more. As a final point, remember to test out the XMaster Formula Indicator on a demo platform before entering the live markets with it, and to invite other indicators to the party. The XMaster loves friends.