There are many different indicators in use for Forex trading today and it can be a problem deciding which is best for you. Here we will discuss three of the main
indicators and you can decide which the best indicator for forex is.
The first indicator is the Moving Average Convergence
This indicator is favored my many traders because of the in-built features. It has the ability to identify reversal of the market and to forecast the trend of the currency pair that you are trading in. It is an excellent indicator for determining fake outs and will minimize this problem for you.
The MACD can be adjusted to suit your trading style. If it is adjusted to be more sensitive it will enhance your trading opportunities but on the minus side it will give off more false alarms. This is possibly the best indicator for forex, here are some of the reasons for choosing MACD:
• Can identify the trend in market reversal.
• Can determine fake outs and minimize the problem.
These are a few of the best points of the MACD indicator but to give you a better sense of security it is better to use it along with al least one other indicator.
The moving average indicator lays claim to being the best indicator for forex due to its ability to identify the trends and the areas of value that should be bought into. The moving average indicator should only be used for long term trading . There are certain time periods that are better for using moving averages and here we will try to show them:
• Moving averages identifies the price trends over certain periods and smooth’s out the price fluctuations that short time volatility causes.
• It adds the total of the closing price and then divides it the moving average period.
It is a matter of judgment when the best time periods are but many traders use the 20 days and 40 days periods to protect themselves. Try moving averages and decide if it is the best indicator for forex available.
The last indicator to be discussed today is the stochastic indicator.
This indicator is based on a number of things too numerous to mention here but these are the basic ideas behind it:
• Can warn of any strength or weaknesses in the market quite often earlier than they occur.
• Has the ability to identify and indicate trend reversals.
These are just two of the benefits of stochastic indicators. You now have some idea how these three indicators work. It is now up to you to decide the best indicator for forex for your personal needs.