Do you know how to create a forex strategy? Forex strategy is a systematic approach to taking and managing trades. In the following section, we have discussed everything you should know regarding forex strategy.
After completing the whole section, you can surely be a master in creating forex strategy and implementing it to get a regular profit.
If you are a forex trader you probably know what the forex indicator is. The Forex indicator is a tool that shows the present price condition based on the previous calculation. If you are a technical analyst, you can boost your trading career by using one or more forex indicators beside the candlestick.
However, traders often find it difficult to get the proven best Forex indicators. Therefore, in the following section, we will see the list of proven best Forex indicators and after completing this you will be able to know how this indicator can change your trading life.
What is The Forex Indicator?
Forex indicators are trading tools that calculate the current price condition based on the previous calculation. Remember that the technical indicator does not provide any future price direction. It is a trader’s duty to analyze what price action happened in the chart and how it will affect the future price direction.
For example, the world’s most used technical indicator is the moving average that shows the average price movement of a currency pair. If we select 100 Simple Moving Averages, we will see the emotion of traders based on the last 100 candles.
Therefore, if the price moves above the 100 Moving Average, we may expect that bulls are stronger than bears. So we may expect that the price will move upside in the coming session. To increase the accuracy of this indication we will use more technical analysis or market sentiment analysis to achieve the high probable price direction.
However, even if you use a high probable price direction, you may lose money from the forex market. Therefore, besides using the technical indicators, you should do a lot of practice regarding how to implement them in the right place and right time.
Top 10 Proven Best Forex Indicators
In this section, we will see the list of the top 10 best Forex indicators that may level up your trading career at least by one step.
1. Moving Average
The world’s most used technical indicator is the moving average that shows the average price movement of a currency pair. If we select 100 Simple Moving Averages, we will see the emotion of traders based on the last 100 candles.
There are many types of moving average, depending on the calculation method- the simple moving average, exponential moving average, weighted moving average, etc.
2. Pivot Point
The pivot point is the equilibrium point of the supply and demand of a currency pair. We know the price of a currency pair moves with the change of supply and demand and when the supply increases, the price will fall and when the demand increases the price will rise.
If you want to find a price level where the supply and demand remain is the equilibrium point. In forex technical analysis pivot points work as an equilibrium point where supply and demand remain almost the same. Traders can anticipate the price movement from an equilibrium point so that the risk becomes lower.
3. MACD
Moving Average Convergence and Divergence (MACD) is an indicator that is shown in a histogram. When the histogram moves above the zero lines, the overall price direction is bullish. On the other hand when the histogram moves below the zero lines, and the price direction becomes bearish.
Technical traders can calculate divergence, usually, the regular divergence and continuous divergence to get a possible reversal point through the MACD indicator.
4. RSI
The relative Strength Index is another Momentum based indicator that shows the price reversal point from 0 to 100 level. When the RSI value falls down below the zero lines the price is likely to move up. Similarly, when the RSI value moves above the 80 line the price is likely to move down.
5. ATR
Average True Range (ATR) is a forex trading indicator that shows the momentum of the price. when the ATR value moves below the 20 lines the strength of the trend is weak. Conversely when the value moves above the 20 lines the strength of the trend is strong.
6. Bollinger Bands
Bollinger Band is a trend following indicator that has three components- the upper band, the lower band, and the middle band.
The Upper band works as a dynamic resistance while the lower band works as a dynamic support. when the price moves beyond that dynamic support and resistance level the price is expected to move higher or lower.
7. Parabolic SAR
Parabolic SAR is represented with some dots above or below the price that works as it has dynamic support and resistance level like the Bollinger bands. We can define the trend by observing the high or low of the SAR dots.
8. Stochastic
Stochastic is another Momentum based indicator just like the Moving Average Convergence And Divergence (MACD). Stochastic also moves within 0 to 100 lines while the above 80 lines is a bullish reversal point and below 20 lines is a bearish reversal point. The main use of this indicator is to identify the reliable price reversal zone along with other indicators.
9. Fibonacci
Although it is a trading tool, it is widely used by technical analysts around the world. Fibonacci is represented by some ratio that is followed by every financial instrument.
In Fibonacci retracement, there are certain ratios while the most important ratio is 50 % and 68.1 %.
Conversely, there is the Fibonacci extension that usually shows which price level may be tested after a breakout.
10. Ichimoku Kinko Hyo
Among other indicators, Ichimoku is special. Because this indicator has some components that are enough to consider this as a complete trading strategy. In Ichimoku, there are some components like- Tenkan Sen and Kijun Sen help to identify the short term and medium-term market sentiment.
Moreover, the Kumo Cloud provides the overall market context. When the price is above the Kumo Cloud, the market sentiment is bullish. On the other hand, when the price moves below the Kumo Cloud the market sentiment is bearish while within the cloud, the price sentiment is corrective.
Conclusion
Let’s summarise the Top 10 Proven Best Forex Indicators:
- Forex indicators are trading tools that calculate the current price condition based on the previous calculation.
- The world’s most used technical indicator is the moving average which shows the average price movement of a currency pair.
- Moving Average Convergence and Divergence (MACD) is an indicator that is shown in a histogram.
- Ichimoku Kinko Hyo has some components that are enough to consider this as a complete trading strategy.
Overall, the price sentiment depends on a trader’s personality, money management rules, and other fundamental factors.
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