Best Forex Trading Indicators - 2 Types of Tools That Can Explode Your Trading

Trading in the foreign exchange market was once a privilege only for large banks and major currency dealers. However, through the advancements of technology more and more "normal folks" are now able to buy and sell on the market from the comfort of their home.

But without the normal education that the pros get, new traders can feel left out in the cold. This is why many traders wisely turn to Forex Trading indicators to help get a handle on profitable trading.

The fact is that these are powerful tools that can help you to organize and measure movements on currency pairs.

The Myth About Forex Trading Indicators

A lot of traders, especially beginners, are led to believe that Forex trading indicators are some sort of secret that will take them down the path to riches.

However most seasoned Forex traders will tell you that this business involves hard work, risk, discipline and the ability to follow rules and trade through tough periods during and draw downs. In other words, if you are looking for a guarantee, trading is probably not for you.

The Facts About Forex Trading Indicators

That said trading the global foreign exchange market can be a highly profitable business, especially with the high amount of leverage that most brokers will give you.

However it is critically important to learn the basics of how to uncover profitable trading opportunities with simple Forex trading indicators.

The Two Types Of Indicators

Forex indicators can be placed into two basic categories - the continuation indicators that follow trends such as moving averages, and those that analyze the velocity or momentum of price movement.

These types of indicators work simply because they define and organize the patterns into an understandable set of tools. Once you learn how to recognize and interpret these indicators, they will tell you which market force, if any, is strongest and where or when there may be a significant imbalance between the two opposing forces that will move the markets.

Moving Average Indicators

Moving averages are one of the most popular and easy to use tools available to the Forex traders looking at timing up or down trends. They help show underlying market movements and can provide additional supporting information on buy and sell decisions.

Moving averages work best when a market is trending, and are less effective when a currency pair chart moves sideways (in a trading range).

This means that you need to first identify markets that display some trending characteristics before attempting to use moving averages.

Moving averages may seem boring compared to other technical indicators, but there is more than meets the eye when it comes to this simple tool.

Moving averages can be applied to any price or data series to generate buy and sell signals for both long and short positions. And they can be used to establish support and resistance points in the markets.

Momentum Indicators

Momentum or Rate of Change oscillators involve the analysis of the rate of price change ,rather than the price level that Moving averages use. The speed of price movement and the rate at which prices are moving up or down provide clues to the amount of strength or weakness of a currency pair at a given point in time.

Momentum oscillators, such as RSI, stochastics, or MACD, are a favorite indicator of many traders and they are best applied to non-trending or sideways markets. So they are the best tool to use when a Moving Average indicator is practically useless.

This is because momentum indicators are generally a leading indicator, and will often move before price action does.

These Forex indicators are set up as an oscillator type of indicator. They help to reveal turning points and extremes when a market has been flat for some time. In physics, momentum is the tendency for an object in motion to stay in motion, and this is the principle behind the momentum indicator.

Combine For Best Results

Between these two indicators you should be able to build a solid trading tool box. Moving averages for currency pairs that are moving up or down with regular consistency, and Momentum indicators for the times when the markets move lazily sideways.

One More Consideration For Forex Trading Success

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Forex Currency Trading Software Types - Robots and Indicators

Looking for the best Forex currency trading software?  Well, nothing is perfect, but there is software out there that will get you pretty darn close!

This is a very volatile time, with world economies under great stress and fluctuations.  So the currency exchange market can be quite lucrative, if you know what you are doing.  But unless you are willing to learn the intricacies of the exchange process, follow the Forex market, and monitor business news real time, so you can somehow "predict" the future movement, you risk loosing your investment.

That is why Forex currency trading software has become so popular.  No longer do you have to spend years learning the system and sit at your terminal to monitor the exchange rates and analyze their trends, you can make use of the power of the computer to reliably do this for you.

Robots and Indicators

There are two types of Forex currency trading software: robots and indicators.  The (almost) sure fire Forex trading robots will make instant decisions based on the market conditions and automatically execute buy/sell orders within the parameters you set, even while you are asleep!  If you prefer more of a "hands on" approach, there is also indicator software available that merely tell you the right times to buy/sell based on the current market conditions, leaving you in complete control of the decision making.

Besides being accurate, a big benefit of the Forex currency trading software is that they take the emotions out of trading.  It is very easy to panic when you see a currency crashing, or to over react when the currency is rising.  The latest systems remove the ego from the equation, allowing you to make profitable trades based on proven algorithms with 80% to 96% success rates.

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