If you are just starting out with Forex trading, you will be intimidated by the number of FX indicators out there. You might even get confused if you are not that well informed. But all these indicators aren’t all needed to become a successful trader. You just need to find the best and learn how to properly run it.
After identifying and learning the right indicator for you, nothing can stop you from going to the path of success. This article will provide you with the best FX indicator that you need to familiarize yourself with so you can trade like a pro.
Although these indicators are proven to be very effective and its immense popularity stands as solid proof that it performs so well. Amidst that, you must understand the importance of the suitability of the indicator to your trading psychology and style. Nothing is more important than to partner with the best indicator that suits your trading style.
Top 5 Best Forex Trading Indicators
- MACD Indicator
- Moving Averages Indicator
- Stochastics Indicator
- RSI Indicator
- Bollinger Band Indicator
Moving Averages Indicator
Moving Average is considered to be one of the finest and most popular trading indicators that are highly suitable for different types of trading strategies. With the use of it, traders are given a simpler way of identifying trading potentials. You can utilize the moving average whenever the FX market goes up or the moving average can be used in figuring out when is the best time to buy and sell orders.
Why is it ideal to make use of an average? Utilizing means, or the average is very useful in leveling out the effects of a particular price movement to promote better identification of the FX trend.
Relative Strength Index, or simply known as RSI, is an oscillatory indicator which serves a very useful application when it comes to FX trading. Oscillators provide assistance when it comes to establishing overbought or oversold currencies as well as an indication for an imminent reversal. This indicator best suits traders who like to ‘buy low and sell high’.
Bollinger Band Indicator
What makes Bollinger Band Indicator among the best FX trading indicators is its volatility channel for a single type or the other. This volatility channel is known as another strategy to discover a trend. With volatility channel, it utilizes the idea that the movement of price above the moving average adds up to an extra amount, this then indicates that the trend is forthcoming.
The Stochastics Indicator
Similar to RSI, Stochastics is also an oscillator that provides assistance to oversold or overbought settings. But one thing that makes Stochastics different from RSI is the fact that it draws two lines – the %K and the %D – these lines act as an entry indicator.
Moving Average Convergence/Divergence (MACD) is another indicator used in Forex but this time, it is mainly used in detecting momentum. MACD helps in identifying a trend and even gives an estimate of how strong the trend can be.