Forex School – 7th Lesson

What are Indicators?

Indicators try to indicate in advance what will happen on the market. They sign that when should we enter the market and help to appoint exit points.

The Indicator is not a magic weapon

Many traders build their strategies to indicators, but it is not too useful. The indicators usually give signs too late and significant part of these signals are false singals. Make decision only on the basis of that information which can be seen on the chart. The best indicator is the price action. There are only few that kind of phenomena on the market which can be measured exactly only with the help of the indicators. These are eg. the divergence and the volatility. If you still use indicators during trading, then use the less. Try to use those indicators that are followed by many traders. In the case of each indicator, use default settings.

The most commonly used Indicators

Moving Average
MACD – Moving Average Convergence/Divergence
RSI – Relative Strength Index
ATR – Average True Range
Bollinger Bands
Fibonacci Retracement