Top Technical Indicators to Use When Trading Forex

Top Technical Indicators to Use When Trading Forex

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Like stocks or any other financial market; forex market news also focus their attention and give importance to various market indicators. There are few primary technical indicator which a trader can effectively use and create a cozy profit for himself. Few of them are:

  • Trend Indicators

Merely by looking at the price chart; one can easily decipher the price trend of a given pair. However, there are indicators which are designed to provide you with an indication of the current trend. Most popular amongst traders is the simple and exponential moving averages. Other in vogue indicators are Supertrend, Parabolic SAR, MACD, etc. They prove crucial as they help you adopt the most profitable strategy of trading in the same direction as the underlying trend. It also gives you an early indication of a change in trend which helps you to prepare for it accordingly and move to an advantageous position.

  • Momentum Indicators

Any Forex market follower knows that the price of any particular pair of currency can trend in positive and negative direction for a long time but to know the strength of any trend; momentum indicators prove crucial. Such popular indicators are RSI, CCI and Stochastics. With the rising and falling of prices, they oscillate from overbought to oversold. They are generally not considered cent percent reliable but they are a good indicator of a trend beginning to lose its momentum and could be on the verge of reversing once they enter the oversold or overbought territory.

Apart from these, there are various other technical indicators like the volatility indicators and the volume indicators. Using these indicators is all about probabilities when you enter for a long position. If you employ a strict stop loss policy and exploit these indicators to confirm positions; then you are likely to have more wins than losses in the long run.