4 Important FOREX Indicators

In the world of FOREX trading there are a number of important FOREX indicators that traders use to identify profitable trades. With both technical and fundamental analysis, there are indicators that you can look to in order to predict where price is heading. These indicators are based on historical data and experience. Mastering several FOREX indicators can help you have a successful career in the FOREX market. Here are a few of the more popular FOREX indicators that are available to traders. 

1. Moving Average

The moving average is a way to look at what price has been doing on average over a certain period of time. Depending on which time frame you select, it will average all of the prices that the currency pair has closed at on that frame. Therefore, when you put it on your chart, it will look like a wavy line that loosely follows the price. There are a few different kinds of moving averages and by looking at them, you can generally help determine which way the overall trend is moving. 

2. Stochastic Oscillator 

The Stochastic oscillator is a unique indicator that you can put at the bottom of a trading chart. This has a line that goes up and down on the chart in a wavy fashion. It helps you determine where action is occurring and whether a currency is overbought or oversold. You can use it in conjunction with other indicators to determine when a move is likely to be made in a certain direction. 

3. News Reports

Another indicator that you will want to pay attention to is economic news reports. This is part of the fundamental analysis of FOREX trading, but it can not be ignored by anyone. The jumps in price that come directly around a news release can be huge. Therefore, if you do not pay attention to these as an indicator, you can lose your investment dollars quickly. Watch the sites that broadcast upcoming news releases and plan your trading around them. 

4. Relative Strength Index

The relative strength index or RSI is a very popular FOREX indicator that you can setup on your charts to help you decide when to trade. When you set this indicator up on your chart, you will see a scale of 0 to 100. It will also help you determine whether a currency is overbought or oversold. If the number represented on the chart is less than 30, it is considered under-bought. This could represent an opportunity to make a buy trade if your other indicators match up. If the number on the RSI is at 70 or above, it is considered overbought. This could tell you that it is a good time to sell the currency pair. 

Using Indicators

There are many more indicators that you could potentially use. Regardless of which ones you choose to put into your trading style, you could profit from all of them. You also need to make sure that you do not use too many indicators and confuse yourself. Keep your strategy simple, stay up to date and make reasonable choices to stay on the winning side of any FOREX trade.

blog comments powered by Disqus