Trading the Forex Market – What Are the Best Forex Trading Indicators?

You can learn to trade forex full-time, and make some very good money doing it. It is very important to remember, however, that without the proper tools and education your dream of building wealth trading online will probably remain just that, a dream.

As you begin trading on your demo account (this is the one that uses “virtual” money, not the real stuff), you will be getting what-are-tradelines/ familiar with charting, reading prices, and entering and exiting trades. One of the first tools you will begin to use on your price charts are many different available “technical indicators” that are in your trading platform.

Which technical indicators should you start with? Many platforms will allow you the use of over 100 indicators! It’s easy for the beginning trader to believe that the more indicators you use, the better you will do. Using too many indicators will give you too many conflicting signals, and you will be in a state of confusion!

If you learn to use a few good indicators (some are simply visual, and some mathematical) and get familiar with how they react to the market moves, you will stand a lot better chance of trading profitably. Let me suggest a few you may want to start with.

1. Trend lines. These are actually lines you will draw yourself. In an uptrend, you will connect the series of higher lows to show support, and in a downtrend, you will connect the series of lower highs to show resistance. Just understanding trends and trading in that direction will go a long way to increasing your success in forex trading.

2. Candlestick charting. This method of charting price bars was developed by the Japanese hundreds of years ago, and provides a very good visual interpretation of the highs, lows, opens, and closes of the bars in whatever time frame you are trading. It also lets you see the strength of a trend at a simple glance at the chart.

3. Basic chart formations. Formations such as triangles, wedges, pennants, double tops or bottoms, to the trained eye, suggest either a price breakout or trend reversal. Recognizing patterns on a price chart should be your first educational goal.

4. Moving averages. These are plotted on the chart for different time periods. In a nutshell, a moving average calculates the average closing price for a certain number of previous bars (you choose the period). When 2 of these, set at different period intervals are put together on a chart, their crossing points sometimes suggest good places to enter and exit trades, or possible areas where the trend might reverse.

Much more can be said about technical analysis than we have room for here, and the new trader is encouraged to pick up a few of the many good books on technical analysis. It doesn’t matter if they were written on stocks, futures, or currency trading, the basic principles apply in every market. Trade these on your demo account until you feel comfortable using them and gain some accuracy at predicting price movement.

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