Let’s Discuss The Indicators Widely Used by Forex Traders

There are many technical indicators available in the Forex market today. Let’s discuss the indicators widely used by traders in this article.

1. Moving Average – simply speaking, moving average is an indicator that identifies and follows the trend.
2. MACD – MACD stands for Moving Average Convergence/Divergence. This indicator shows the pace of the market. MACD helps traders see when the market gets tired moving in one direction and needs a rest.
3. Relative Strength Index – RSI helps traders identify overbought and oversold positions and can be very handy in signaling the start of a new trend.
4. Bollinger Bands – Developed by John Bollinger, Bollinger bands is a chart indicator that measures the volatility of the market. In simple terms, it tells traders whether the market is quiet, or whether the market is loud. The idea is that if the bands contract, it means that the market is quiet, and when the bands expand, the market is loud.
5. Stochastic – This kind of technical indicator helps traders determine the price’s further direction. Stochastic tells you whether the price of a currency pair is overbought or just like the RSI.
6. Parabolic SAR – Designed by technical analyst J. Welles Wilder Jr., this indicator is used to evaluate the momentum of a currency pair to know better when a trend is ending. This information helps traders make better decisions on when they should exit.

Which technical indicator is best for beginners?

It has been said that the best technical indicators for beginners are the Moving Average, RSI, and Stochastic. Use any of these technical indicators when you think you’ve already got enough knowledge of them. Of course, you will need a trading platform like the MetaTrader 4 to use them.

Do technical indicators work 100%?

While technical indicators are very helpful, they have flaws and won’t always work perfectly. Therefore, do not solely rely on them. What you can do is to use these indicators as an additional confirmation for your trades.

Writer: Clarissa

Also read: Is It Really Wise to Learn from Forex Books?