How Do Forex Indicators Work?

Finding Forex Indicators That Work

As forex traders, we have very little information available to us. All we know unequivocally is:

• The market price in the past
• The market price right now

That’s it.

As an example, your candlesticks give a visual representation of how price moved in the past, with the hope you can use this information from technical indicators to predict what’s going to happen in the future. In fact, this is the main idea behind technical analysis – predict future prices based on previous price data. Many traders analyze currency pairs with a naked chart, however, others feel more confident with top forex indicators that provide small insights into the future price of an asset.

But the challenge is to find forex indicators that work for your trading needs. Ironically, you might find one trader that is successfully using a certain indicator while another forex trader cannot find the formula to effectively use the same indicator. It is a classic case of trial and error. Whatever you do, make sure you choose the right forex broker that gives you access to one of the best forex trading platforms. By doing so, you’ll be able to analyze the market with multiple indicators and open simultaneously several charts.

What Are the Best Forex Indicators?

Every forex technical indicator will simply show you different visual representations of this same information. In forex trading, there are different types of indicators including forex volatility indicators, forex trend indicators, forex momentum indicators, forex volume indicators, and many more. Once you can identify what type of trader you are, you will also which one of a type of indicators you are about to use.

In general, some of the best forex indicators used by many forex traders include the Relative Strength Index (RSI), Moving Average ( MA), Moving Average Convergence Divergence (MACD Indicator), CCI, Momentum Indicator (Oscillator), Exponential Moving Average (EMA), Stochastic Indicator and Bollinger Bands.

No indicator contains a secret sauce capable of telling you when to enter and exit the market at the perfect time and find out what’s the next currency market direction. When you look at these forex indicators you’re seeing the same information, just in a different format.

I’m possibly being a bit dismissive, partially because I don’t use forex technical indicators. I do know plenty of profitable traders that do because it helps them understand the previous market movements better than a naked chart. If that’s you, then by all means continue.

But… If like I suspected, you’re wanting to use the best forex indicator for you to simplify the forex market and tell you when to enter and exit, you’re on the wrong track.

Regardless, if you want to succeed with your trading you’ll need to learn the fundamentals of why the forex market moves. I have spent decades developing my own trading strategy and the competitive edge that’s allowed me to sustain my family and me while reaching financial freedom from trading. I’m happy to teach you how to do it so you too can taste the success and the freedom that being a professional trader affords.

Just drop into the trading room during the Asian session for one of my live streams and I’ll do my best to guide you onto a path of profitability.