“The best Forex indicators” – on average, this request is driven into the search engines of more than 600 people per month. The number seems small, if you do not take into account other combinations of words. In general, according to wordstat, more than 3,000 people every month are interested in certain types of indicators. And this suggests that technical analysis is popular.
This review will be of interest primarily to novice traders who have little understanding of the specifics of technical trading, trying to use all the indicators together, without delving into the essence of their work. But maybe experienced traders will see something useful for themselves.
Best Forex Indicators
The principle of using indicators in technical analysis is to properly organize and combine them. Of course, there are strategies that use only oscillators or only trend indicators, but this is rather the exception. A more logical combination of indicators is the trend indicators and oscillators confirming the signal. However, this question is individual.
Types of Forex Indicators:
- Channel. One of the most popular options for indicators. Their task is to construct the boundaries of the channel within which the price moves. These channels are a kind of flexible levels of resistance and support. Strategies based on them – the emergence of a strong trend in the event of a price breakdown channel or trading on the rebound. Examples: Bollinger Bands, BandsdFibo True.
- Informational. These indicators do not allow a direct decision to open a position, but they help analyzing the situation quite well. These are indicators of time, news, statistics dashboards, etc.
- Oscillators. These are confirmatory indicators that show the moment of a potential price reversal within the framework of a general range movement. In other words, they show overbought and oversold moments of the market. Refer to warning indicators. Best Forex Indicators – RSI, Stochastic.
- Arrow. An indicator option, where an alert is displayed on the screen: sound and visual signals. The indicators on the chart with arrows (dots) indicate the most successful entry points (which, however, can be redrawn). Example: Dots, ZigZag Larsen Out & Alerts.
- Trending. Indicates the beginning (birth) of the trend after the reversal. They are used in wave strategies, help eliminate time correction. Examples of the best Forex indicators: MACD, RSI, OBV.
- Volume indicators. Show the number of transactions in the market for a certain period of time. Examples: Accumulation / Distribution, Volumes.
- Indicators of patterns. Allow to track the formation of candlestick patterns (figures), which are not always visible visually. Examples: Pattern Recognition, Pattern Alert.
- Level indicators. Visual levels of resistance and support are drawn on a chart. They differ from channel ones in that they build statistical phase lines, which are strong levels based on maxima and minima. Examples: ACD, MaxMinBands.
- Divergence indicators. Divergence – the discrepancy between the price and the indicator reading. It is a strong signal to change the direction of the trend. Often, classic MACD, CCI or stochastics are used to search for such moments.
- For scalping. Indicators that instantly reflect a market situation based on small timeframe data. Examples: Scalper Dream, Free Scalping.
- Volatility. Indicators reflecting the nature of price changes. Suitable for short-term trading on volatile currency pairs. Example: Chaikin Volatility Indicator.
- Without redrawing. Redrawing is one of the problems of signal and other indicators. The indicator is based on a formula based on data on price values for previous periods. If the current price value changes, the total information output by the indicator also changes. Because of what the signal disappears. Indicators without redrawing have a unique formula, though not without drawbacks. Examples: Zero Lag Stochastic, Kwan NRP.
The separation of the best Forex indicators is conditional, but it allows you to present the big picture. We invite everyone to join the discussion of indicators in the comments after the article. Tell us what indicators you use and what group you would add to this list.