Proven Best Forex Indicators
Forex indicators are essential trading tools. This article provides a list of the proven best Forex indicators that have proven to be accurate and credible. They may have a massive impact on your trading activities if you use them properly.
Given the proliferation of Forex indicators, some traders find it a bit tricky to choose the best forex indicator.
What are Forex Indicators?
A Forex technical analysis indicator, commonly referred to as Forex indicator, is a trading tool that is used for forecasting changes in prices of commodity on the currency market.
The calculation takes the price and volume of the financial instrument to be analyzed into consideration to arrive at an accurate result.
Top 6 Best Forex Indicators
Going through the huge list of available forex indicators to choose the best one to boost your trading won’t only be energy-sapping; it will be time-consuming as well.
Therefore, here is a list of the top six proven best forex indicators you can use to improve your trading. They are designed for all classes of Forex traders.
1. Parabolic SAR
Parabolic Stop And Reverse or Parabolic SAR is a momentum indicator designed for identifying potential trend reversals during trading. The reversals may occur in a strong downtrend or uptrend. During a reversal, an uptrend may change into a downtrend. Similarly, an uptrend may occur as a result of the reversal of a downtrend.
If you can utilize this indicator properly, determining the direction of a trend won’t ’be challenging. Thus, the indicator will provide you with an excellent entry and exit points. That’s aside from helping you to know where to place your trailing stops.
In a nutshell, the indicator highlights the current trend, provides traders with entry and exit signals during a reversal, as well as attempt to predict a reversal in the current trend.
2. Bollinger Bands
This is one of the proven best forex indicators you can use for better trading results. Bollinger Bands was created in the 1980s by John Bollinger, an analyst a trader, and an investment teacher. The technical indicator can help traders to determine the prices of the market whether they are low or high.
The indicator has proven to be a reliable tool for traders to determine oversold and overbought zone. It also comes in handy for confirming divergences between indicators and prices. Hence, traders can use the indicator to project specific price targets.
When using Bollinger Bands, traders pay attention to its bands because market volatility is a function of the bands. Hence, wider bands trigger greater volatility while the volatility decreases when the bands are narrower.
3. Stochastic Oscillator
A member of the momentum indicators group, Stochastic Oscillator was developed in the late 1950s by George C. Lane. It was designed to follow the momentum or speed of price. Hence, it indicates the location of the closing price in relations to the market’s high-low range over a specific time period.
The oscillator works on the two principles. A downtrend condition shows the closing price is inclined to close near low. This implies that the prices will be below or equal to the previous closing price.
On the other hand, in an uptrend, the closing price closes near the high in an uptrend or above or equal to the previous closing price. Thus, you have a specific idea of the movement of the price at a given time period.
4. Moving Average Convergence Divergence (MACD)
MACD is a tool that a trader can use to identify moving averages pointing to a new trend, bearish or bullish. This is a piece of important information considering that finding a trend is a priority in trading. If you follow the trend, you will make money. Otherwise, you are less likely going to make money from trading.
As a trend momentum, MACD focuses on the price of a security. It shows how the moving averages of the price are related to each other. Thus, to arrive at the MACD, the value of the 12-period Exponential Moving Average is subtracted from the value of the 26-period Exponential Moving Average. This gives the MACD line.
The indicator specifically assists investors to know the condition of the strength of the bearish or bullish movement in a commodity’s strength. It shows if it is weakening or strengthening.
5. Relative Strength Index (RSI)
This technical director measures the weakness or strength of a pair of currency. It compares its down movements with its up movements over a period of time. To get an accurate result, the indicator keeps track of recent losses and gains. It compares the value with the current price.
As a momentum indicator, you can use RSI to determine the strength and speed of price movement. You can also use it to determine the strength of the underlying momentum. Some other RSI uses are:
- Identifying oversold and overbought conditions.
- Helping traders to identify price momentum.
- Identifying the hidden divergence and divergence signals.
Equipped with these pieces of information, you can easily determine whether a trend is worthy of your investment or not.
6. Moving Average
Moving Average is a trend indicator that helps traders to identify trends and follow them. The indicator shows a price’s average value over a given time period.
By following price to help it to identify a trend, the trend indicator helps traders to focus on the existing trend, giving no room for unwanted price noise to distract them. It also shows potential resistance and support levels. That is in addition to finding trend reversals, helping traders to make intelligent decisions.
However, it is noteworthy that the indicator doesn’t predict future price but it gives an insight into the market’s direction.
Conclusion of Proven Best Forex Indicators
These are some of the proven best Forex indicators every trader should be familiar with. They should form a part of your trading tools to improve your chances of becoming a professional trader. With the aid of these tools, your chances of making wrong trading decisions are significantly reduced because you understand the market better.
Trading on Best MT4 Indicators or any other credible trading platform with your preferred forex indicators boosts your success chances. The ball is in your court. While if you like to have additional tools and indicators to enhance your profit-making capability, then look at this link and start the push for higher gains.
And remember to share your trading experience using the above Proven Best Forex Indicators. Add your comments and feedback in the comment section below on our Best MT4 Indicators website.