Most Used For ex Indicators by Expert Traders

We are all aware of the buzz of how huge the forex market is, it is worth trillions. Yet, loss is so common with beginning traders while expert traders make lots of profits from their trades. Following every advice, tip and insight could be blamed for the loss beginning traders face. However, it all bounces back to the experience. The one thing that helps expert traders make big profits.

There is a start to everything so, there is a way to make huge profits from the forex market even as a beginning trader. In this article, I have written out the best forex indicators expert traders use and how you can use it to grow in your trading journey. But first, what are forex indicators？

What Are Forex Indicators？

Forex Indicators are guides that forex traders use to maximize profit and minimize loss. It gives traders data to analyze and know when to purchase assets, when to sell and the time to close a trade. Having the knowledge of these indicators and how expert traders use them will allow you change your forex game for the better.

Lets quickly look at the various indicators marked out by expert traders.

Moving average

The moving average is an age long indicator used by expert traders to make analysis on market trends and prices. It provides data around commodities and helps traders gain insight around trades. The principle of this indicator lies in determination of trends as it signals to traders when a new trend begins.

The two most popular kinds of moving averages are the exponential moving average and simple moving average.

The price action is used to determine uptrends or downtrends. When the price action is above a moving average, it is an uptrend and when the price action is below the moving average, it is a downtrend.

For example, when price action is below a 20 period moving average on a one hour time frame, it is considered a downtrend and when the price action is above a 20 period moving average, it is considered an uptrend.

However, the exponential moving average is used for detection of large price changes. Unlike the simple moving average, it is more sensitive to price action.

Moving Average Convergence/Divergence

The moving average convergence/divergence was invented by Gerald Apple as an indicator to serve the function of identifying market trends.

This indicator not only signals new trends but also gives data on the momentum and strength of an indicated trend. The moving average convergence/divergence line referred to as MACD line for short is calculated by subtracting the twenty six day exponential moving average from the twelve day exponential moving average.

Here, trading decisions can be made when the MACD line crosses the MACD histogram. For example, a buy decision can be made when the MACD histogram line crosses above the MACD exponential moving average of 9 in a typical default MACD setting of (12,26,9). And, a sell decision can be made when the MACD line crosses below the exponential moving average of 9 in a default MACD setting of (12,26,9).

Bollinger Band

The Bollinger Band is another awesome indicator most expert traders refer to for guidance in the market. It helps traders identify how much change an asset can undergo from a given point.

The Bollinger Band is made up of a moving average and a standard deviation of the moving average.

The moving average functions just like the moving average indicator while the standard deviation lines indicate how far the prices of commodities differ from average price. In summary, the Bollinger Band gives traders data about price changes shining light on when and how to trade as well as when not to.

Fibonacci Retracement

The Fibonacci Retracement is a technique that serves as an indicator for market trends. This technique helps traders predict the increase or decrease in market price of a commodity. It also signals if a commodity will experience a big price move and how to work around it.

The numbers in the Fibonacci Retracement starts with binary codes, 0 and 1. It then continues by adding up the last two numbers. So it starts as : 0,1,1,2,3,5,8,13,21 and so on.

The idea lies in the fact that when prices of commodities rise, they return to the initial price position following certain patterns. This is applicable to commodities that face drastic price changes. The patterns the changes follow can be understood following the Fibonacci sequence.

We have the ratios 0.618,0.382,0.236.

In order to know the pattern a certain price change followed, you must know how to calculate individual change patterns. For the 0.618 ratio change, it is calculated by dividing a number from the sequence by a number that follows it. Given a sequence of…, 34,55,89…, the change for this ratio can be calculated by 34/55 = 0.618

The 0.382 ratio is gotten by dividing a number by the one that is two places ahead of it in the sequence. For a sequence where price changes vary largely like… 34,55,89,144…, the change for this ratio can be calculated by 34/89 = 0.382

Then for the last pattern, the 0.236 ratio. It is gotten by dividing a number by the third number after it. Using our above sequence 34,55,89,144 as an example. The ratio will be given by 34/144 = 0.236

Relative Strength Index

The relative strength index gives data on when a commodity is being bought or sold highly. Given a scale of 0-100, 30 is known to suggest a commodity being oversold and 70 suggests a commodity being overbought.

By knowing the highs and lows of a certain commodity, that is, when it is being overbought or oversold, expert traders can discern when to trade and how to go about it. As well as when to lay back.

Oscillator

The Oscillators just like the moving average give insight into the price changes and price momentum in the market. This indicator is very helpful to expert traders as it gives an idea of the breaking point in price changes.

Traders use a variety of charts and software for analysis. The difference between expert traders and inexperienced traders is knowing which indicator or how many indicators to rely on in different situations. Many expert traders make their analysis from combined signals gotten from several indicators.

However, the indicators listed above are the most used by expert traders based on research.