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Forex indicators are one of the many tools that a Forex trader uses in order to predict the direction where the market will be going. This will enable them to make strategies based on the information they would get from these indicators.
To make more accurate trades, it is best to use not just one but a combination of several indicators to make the trade more profitable. This depends on the trader’s technique of combining information and using them to make a strategy for a good trade. These bits of information should ideally be complementary to confirm each other’s information instead of just repeating it.
The most used Forex indicators today run on the Meta Trader 4 platform since most Forex system use this as well. All in all, there are more than a thousand indicators that work in different platforms aside from MT4. In fact, if you search the internet using Forex indicators, you will get a lot of lists that run in several platforms. These indicators have different functions and can be used in combination to strengthen your choice of trade for the day.
Here are some tips on how to maximize the earning potential of Forex indicators:
• Use the indicators to identify the trend of the market. As mentioned earlier, the more indicators you use, the more reliable will be your choice. But make sure that your indicator is accurate in determining the strength of the market trend.
• Use the indicators to identify reversals as well. Indicators will also show starting signs of reversal in the market, which will be your signal to withdraw your trade or else get caught in the downslide.
• Indicators can also help you formulate your entry into a currency trade. Use more than one indicator to confirm each other’s accuracy that the trend is really getting strong and the upward movement is not just a fluke or a momentary spike.
• If there is a signal for entry, there should also be a signal to exit. When the indicators are showing a decrease and downward trend, you can exit the trading platform to conserve your profit and minimize losses.
For each of these functions, different indicators can be used. For example, trends can be identified by moving averages indicator while reversals can be seen in RSI or Stochastic indicators. Parabolic SARand moving averages can be used for entry while SAR and MACDare utilized for exit planning.
At present the most popular Forex indicator to date are the Moving Averages, Stochastic Indicators and MACD indicators in that order.
Aside from these, there are also other Forex indicators that the trader may find helpful due to their specific functions used as a tool for making forecasting as well as cues for entering or exiting a trade. It can show the currency’s stability or volatility in the market or they can exhibit the trends and reversals that can be a big help to the trader. The utilization of these indicators depends on the trader’s style as well as his experience in using a combination of 2 or more indicators for a more accurate forecasting that will lead to sure profits.