Trading signals and indicators: what your trading toolbox must include

Forex is one of the most popular, tradable asset classes worldwide. The foreign exchange market is open 24 hours a day during the week and all you need is a small deposit to get started. The foreign exchange market has low commission fees and there are only a handful of products to choose from. In contrast to stocks where you have to choose from several tens of thousands of shares, with forex you can choose from the most liquid coin pairs that can be counted on one hand.

Even though currency trading can prove challenging, there are several tools forex traders can rely on to spot trading opportunities and make better decisions in times of volatility in the markets.

One of the most effective is the use of accurate forex signals to predict the most likely future price action. In today's rapidly evolving market environment, it is virtually impossible to manually track and analyze all markets. For that reason, the vast majority of traders use Forex indicators or trading indicators to handle most of the heavy lifting in the area of analysis. Forex signals are one of the most effective trading tools that can not only simplify but also refine your analysis and help you become a better forex trader with time.

Technical analysis indicators

There are many forex/trading indicators available. A good starting point for traders is to prefer forex indicators that are simple to use.

Simple Moving Average (SMA) Trading Indicators

The 'simple moving average', also known as the Simple Moving Average Forex indicator, shows the average price for a specific period of time. E.g., a 20 day moving average is the average of the closing prices over the previous 20 days. The moving average is a Forex trend indicator and can be used to identify how the price can move in the future based on how it performed over a period of time in the past.

Exponential Moving Average (EMA) Trading Indicators

Although this Forex indicator is similar to the simple moving average, it has a stronger focus on the most recent prices. The Exponential Moving Average, also known as the Exponential Moving Average (EMA trade indicator), assigns a heavier weight to the more recent prices. As older price values have lesser impact on the average, the EMA Forex indicator will also react faster to price changes.

Typical values for long-term averages range from 50-time units (often days) to 200-day EMAs. 12- and 26-period EMAs are also commonly used short-term averages.

MACD Trade Indicator

The MACD Forex indicator also uses moving average trading indicators. MACD stands for Moving average convergence / divergence. This Forex indicator helps measure the momentum of the price movement. In addition to identifying trading trends, the MACD Forex trend indicator also gauges the strength of the trend movement. If your strategy benefits from knowing how strong the momentum of a particular price movement is, the MACD trade indicator may prove to be one of the best Forex indicators for you.

The Bollinger Band Forex Indicator

Every list of top Forex indicator features a volatility channel Forex indicator. Using a volatility channel is an effective method to identify trading trends. The Bollinger Bands trade indicator is considered one of the best Forex indicators in this category.

The Bollinger band Forex indicator uses two parameters:

1. The number of time units that comprise the moving average.
2. The number of standard deviations; this determines the distance between the central moving average and the outer bands.

The Bollinger Bands Forex trend indicator is a very versatile tool and is regarded by many as one of the best forex indicators. Remember, always test all trading indicators yourself on a risk-free demo account before applying them in a live setting.

The best Forex indicators suit your trading style and support your strategy and can develop your trading skills over time with practice. With a demo trading account, you can navigate the financial markets in real time in a risk-free manner while improving your skills.

Author Bio:

Aiswarya Gopan 

Financial Writer & Editor – Asia & Europe Desk

She is a former cybersecurity analyst, tech journalist and market researcher, who joins FX Leaders with over three years of experience in the blockchain industry. Aiswarya’s areas of focus include market news out of the Asian and European markets as well as news coverage on cryptocurrencies.