4 Types of Indicators that FX Traders Must Know

You can't trade forex without knowing these types of indicators.

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http://www.investopedia.com/articles/forex/100515/these-are-most-famous-forex-traders-ever.asp

Successful forex traders know
how to use market indicators

that reveal the best time to buy,
or sell a forex cross rate.

Here are four
of the most popular.

The first one is
a trend-following tool,

which suggests whether
to enter a long, or short position.

Essentially, trend-following tools
help traders recognize major trends,

and then profit by trading
in those trends' directions.

One method is the moving
average crossover.

If the price of a stock climbs
above its 20-day moving average,

it could be
a signal to buy.

The second is a trend
confirmation tool.

If it concurs with
the trend-following tool,

a bullish sign tells a trader
to take a long position

in the currency
pair in question.

A bearish sign means find
an opportunity to sell short.

The moving average
convergence divergence,

or MAC-D is a popular
trend-confirmation tool.

The third indicator is
an overbought, oversold tool.

Traders must decide whether to jump in
as soon as a clear trend is established,

or to wait until after a pullback
occurs, so they can minimize risk.

The three-day relative strength index
can help traders make the decision.

The RSI calculates the total sum of up
days and down days over a time period,

providing a value that
ranges from 0 to 100.

An asset is deemed overbought
once its RSI level nears 70,

and undervalued
if it nears 30.

And the fourth indicator
is a profit-taking tool.

An RSI that rises to 80 or more is an
indication that it's time to take profits.

Other good indicators are
Bollinger bands and a trailing stop.