Best forex indicator
Top 10 Forex Indicators That Every Trader Should Know
- Bollinger Bands.
- Ichimoku Kinko Hyo.
- Average True Range.
- Parabolic SAR.
- Pivot Point.
This is the Forex Indicator Most Often Chosen by Traders
For those who are just starting a career as a trader, learning forex (foreign exchange) is one of the mandatory steps. They must know various things about the world of trading. They also have to determine the trading method to be used.
Actually, in forex trading, every trader must have a different method. No problem, as long as you use clear forex indicators to find trading opportunities.
To have a successful career as a trader, it doesn’t matter if you imitate the strategies of other experienced traders. Especially if these indicators have proven successful in the field. Also, don’t forget to keep practicing your ability to analyze market trends.
So, what are the most frequently chosen forex indicators by traders? Check out the summary below.
The Price Action
The Price Action is often understood as a pattern of price movement. The Price Action is also often considered as a separate indicator. In this case, traders must be observant in analyzing price trends, before using other indicators. Once you have managed to read the trend, then the trader can try other indicators to detect the direction of the entry signal.
For example, a trader sees that the hourly EUR/GBP chart is declining. This can be seen from the longer time frame on the chart. Based on this information, the trader should sell the currency to get a chance to win more.
The Moving Average (MA)
The Moving Average is the most frequently chosen forex indicator by traders. The reason is, MA has been proven to be effective in forex trading. MA helps traders to find the highest odds that align with the general market trend.
MA can display the average calculation result line for a certain currency denomination with a specific period. Hence, traders can take advantage of more than one MA at the same time. The goal is to confirm market trends before it’s time to find the right moment for buying and selling positions.
The Relative Strength Index (RSI)
This indicator in forex trading is a simple oscillator. Through this indicator, traders can immediately see the position of the currency in the market trend. If there is an overbought, oversold, or price reversal, traders can immediately see it through the RSI indicator.
As an oscillator, the RSI displays numbers between 0 – 100. The number 100 indicates an overbought currency. The number 0 indicates the currency is oversold. RSI can be used in a balanced way for market trends and ranges.
The RSI is very easy to read, even for novice traders. When the market trend is up, it is easier for traders to open forex trading again.
At first glance, The Stochastic is an oscillator similar to the RSI. Traders can also read overbought or oversold trends through this indicator. Traders can also see the possibility of a price reversal.
The Stochastic has two entry signal lines, namely %K and %D. When the %K line moves past the %D line, the trader gets a valid buy signal in line with the trend. Traders can also look for sell signals with this indicator.
The Moving Average Convergence/Divergence (MACD)
For those who are just learning forex, introduce this king of oscillators. From the name, MACD uses the MA element to show changing moments in the market. For this indicator, there are two things that traders must understand, namely:
Lines Related to Zero Line
By identifying this line, traders can see the rising and falling bias in the currency.
Cross of the Upper and Lower on the MACD Line
The red line is a sign for a buy signal, while the blue line is a sell signal. For trend and range identification, MACD is much more effective. Once the trend has been tracked, the trader can immediately set a stop below the current price before the cross. Traders can also set a limit of twice the nominal risk.
The On Balance Volume (OBV)
Well, this indicator is a bit complicated. When the price in the market rises, the OBV indicator will also increase. Vice versa. When the price is falling, the OBV also decreases. Ideally, volume confirms the market trend. However, since market conditions are not always ideal, there is a possibility that the market price will remain even though the OBV increases.
This is the forex indicator that is most often chosen by traders. You can use more than one indicator in forex trading.