By Linda Green – Here are the few forex indicators that help the traders to achieve success in making trade position and attaining maturity in your trades at the Forex trading platform providing you the ability to optimize returns on your buying and selling deals.
The indicators are SMA, EMA, and Bollinger bands, RSI, Stochastic, Oscillators and Momentum. Few of them are explained here.
These indicators help to add momentum to the trade moves with respect to the market condition and traders can fetch returns under any kind of trading situation whether the currency pairs are loosing their strength at the Forex trading platform or the Forex accounts of certain traders are heading up.
Simple Moving Average (SMA) – This is the average price over a certain period of time, considering that equal weightage is given to each daily price move of the currency. The time span considered for tallying the trade is of 5 minutes, 10 minutes, 1 day, 1 month or more, where each of the preferred periods lugs the same weight for the average.
Exponential Moving Average (EMA) – In this, exponential moving average indicator the averages are calculated considering the current exchange rates of the currency pairs hauling more influence in the overall average; for exemplar: In a 10-day exponential moving average, the last 5 days will have more effect on the average than the first 5 days.
The layout behind this idea is to employ the latest data as an enhanced indication of Forex trend direction. This moving average responds closer to fresh price changes than a simple moving average.
The 12 and 26-day EMAs are the widely used short-term averages, and they are used to derive indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 50- and 200-day EMAs are considered as signals of Forex long-term trends.
Bollinger Bands – The basic construal of Bollinger Bands is that, the values of the currency pairs have a propensity to stay within the upper and lower bands. The Bollinger Bands have inimitable trait that the spacing between the bands contrasts based on the volatility of the currency pair value. During high volatility periods, the bands expand to become more forgiving. Similarly during periods of low volatility, the bands contract to enclose currency prices. The bands are drawn with two standard deviations above and below a SMA. They indicate a “sell” when above the moving average (or close to the upper band) and a “buy” when below it (or close to the lower band).
The bands are used by some Forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.
About the Author
I am Linda Green and have keen interest in financial investments and matters related to Forex trade. I am working in Forex trading and financial investments for Finexo.com. The site gives relevant information on currency trading and provides regular updates of the changes in Forex currency pairs like USD/EUR.
