Forex Trading Indicators
A FOREX trader should learn FOREX trading indicators if they wants to become a successful investor in this financial market. There’re several different indicators to select by a trader.
Though applying these indicators doesn’t guarantee profit since foreign currency exchange market is basically a speculative venture, but applying right indicator can minimize your losses and make good returns on your investment. Therefore learning all available indicators is a key to greatly enhance your chances.
The leading indicators
First, you should familiarize yourself with available types of indicators before started applying them. All available indicators in the FOREX trading market are covered in two types: 1) The leading indicators 2) The lagging indicators.
The leading indicators are used to get indication about a buy signal before reversal or new trend appears. On the other hand, a lagging indicator is used by a FOREX trader to get indication after the trend changes.
Oscillators, is another term/name which is used for the leading indicators. These indicators include tools, such as the Ultimate Oscillator and the MACD (Moving Average Convergence Divergence). The tools like Bollinger Bands and the Moving Averages are included in the lagging indicators, also identified as momentum oscillators.
Developing a trading plan
Developing a trading plan is truly essential for FOREX traders because it keeps them consistent in their trading. It also helps in avoiding irrational decisions which are likely to make occasionally in different situations including market sentiments and emotions, but should be made based on fundamentals. The type of the market is vital to consider before making a good trading plan, because indicators provide different results based on the market type.
Select the best suitable FOREX trading indicator based on the market type. A practice account can be an asset to learn different market types and different indicators.
The leading indicators are considered good to start because they inform before a trend change occurs. But wide fluctuations in the FOREX market make them highly inaccurate sometimes. These types of markets where wide fluctuations are routine matters, the lagging indicators should be applied.
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