Contrary to the advertisements that you see online, Forex trading is not the easiest way to earn money online. Surely, you can’t become a millionaire overnight or double your capital after a few trades. Forex traders need to have a strong mental state and a powerful strategy to succeed. But despite all the hardships, there are still a lot of traders who became successful in trading, making continuous profits and enjoying the best things in life.
The Forex Trading Indicators
No matter how hard trading can be, there are Forex trading indicators that help with your trading career. And because of the indicators available in the market, it goes to show that the Forex market doesn’t work randomly, just like what some economic theories suggest. In the market, there are instances in which it behaves under certain conditions. Then this behavior repeats again as a time pattern is formed. The use of Forex indicators is to recognize these patterns when they are formed and give traders an edge when they make use of that same knowledge. When trading Forex, you must make sure to utilize a powerful trading platform such as the MetaTrader 4 to take advantage of its indicators and the trading opportunities that come along.
The Best Trading Indicators in Forex
Although no trading indicator fits perfectly in all the trading styles of traders, you can choose from the wide array of options available in MT4. Each indicator can fit one trader but not with the other. Trading styles and psychology are a few of the things that need to be considered.
Simple Moving Average (SMA)
The Simple Moving Average works like the average price in a specific time period. SMA smooths out the price movement when identifying the trend. But SMA is considered as a lagging indicator, which means that it uses the prices from the previous trades then provides a trading signal when the trend begins.
Exponential Moving Average (EMA)
The Exponential Moving Average can somehow work similarly with the Simple Moving Average. The only difference is that it provides more weight on the recent price values. EMA response quicker when there are changes in the price.
The concept that you have to follow here is to buy whenever the shorter moving average (MA) crosses above the MA while selling whenever the short MA goes below the slower MA.
The Moving Average Convergence Divergence (MACD) Indicator
Another famous Forex trading indicator that is also available in MetaTrader 4 is the Moving Average Convergence/Divergence (MACD). This indicator used in Forex trading is made to gauge momentum. It also identifies a trend and measures the strength of the trend as well.
The Bollinger Band
Invented by John Bollinger, this indicator acts as a volatility channel that has been in the industry for more than 30 years. It is considered the best trading indicator in Forex when it comes to volatility channel methods.
This indicator comes from the idea that when extreme movement in the market happens, there will be an increased chance of retracing under a certain key proportion. The said proportions are from a Fibonacci sequence.