How to Use Forex Indicators

Most people know that they need the help of forex indicators if they want to be a technical trader. But not many of them know how to use forex indicators in their trading as they are not sure about the individual features of them.

Below are how you can use the indicators

1) Identify Trend: You can use the forex indicators like the moving averages to help you determine the trend of the market as well as the strength of the trend

2) Identify Reversal: You can also use the indicators to help you predict possible reversal in market so that you will not be caught in the wrong side of the market. The best tool to use is the oscillating indicators like the RSI or Stochastic.

3) Identify Entry: There are a number of ways you can make use of the indicators to help you formulate an entry to a trade. One good way will be the use of parabolic SAR which will signal you to buy when the dot is formed at the bottom of the candle and to sell when the dot is formed at the top of the candle.

Another entry technique will be the use of moving averages crossover. You can sell when you see the faster moving average crosses below the slower moving average. As for buy signal, the situation will reverse.

4) Identify Exit: In contrast to the entry, you can use the parabolic Sar to signal an exit when the dot is formed on the opposite side from your position. As for the moving averages, you can exit your SHORT trade when the faster EMA crosses above the slower EMA. You can exit your LONG trade when the faster EMA crosses below the slower EMA.

Basically, the above are how you can and should use the forex indicators for. Depending on the type of trading strategy that you are going to use, you will need a different combination of them to work with.