Best Indicators For Forex Trading

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Here at the Income Mentor Box Day Trading Academy, a main area of learning has to do with trading indicators and technical analysis. These are things you need to become intimately familiar with if you want to become a professional day trader!

 

Types Of Indicators – Technical Indicators

When it comes to the different types of technical indicators out there, there are 5 main ones that you need to be aware of. You need to be familiar with these indicators in order to be the best trader you can be. If you join our Income Mentor Box Day Trading Academy, we will teach you all about these trading indicators.

Andrew, our top mentor, knows how to explain these topics in a very easy to grasp manner. If you are a member of our academy, you will have access to various full length trading lessons centered around these trading indicators. They come in very handy when it comes to judging whether or not a certain trading position is worth opening.

These technical indicators apply to Forex, CFD, stocks, and much more. In fact, we said that they come in handy, but the fact of the matter is that trading without performing technical analysis is nearly impossible. You need to master, or at least be quite familiar, with the various types of technical analysis if you have any hopes of being a successful and profitable day trader.

So, what are the 5 main types of technical indicators that you need to be familiar with?

1. Volume

These relate the price of an asset and its volume. These are indicators which count trades and quantify whether there is a bull or bear market for that specific asset.

2. Relative Strength

These are also known as RSIs for short. Relative strength indicators measure the oscillations in the buying and selling of a certain asset over a given period of time.

3. Momentum

Momentum indicators are used to measure the speed of price change over a certain period of time, as well as its direction.

4. Trend

Trend indicators are very important because they analyze if a market, or certain asset type, or asset, is moving up, down, or sideways.

5. Mean Reversion

These indicators are a bit harder to use, but in theory, they measure how far a price swing will go before there is a counter impulse which should trigger a price retracement.

 

 

Best Indicators For Forex By Category

Now that we have discovered what the different types of technical indicators for Forex trading are, we should probably talk about the best indicators to use within each type of technical analysis class, so let’s get right to it.

Trend Indicators: EMAs (Exponential Moving Averages)

Moving average indicators are fantastic because they take a look at price action over a specific period of time. There is then a running average created for each bar to indicate price over a given time period. The best ones to use here are usually the 50 day exponential moving average indicators and the 200 day exponential moving average indicators. The first will tell you the average intermediate price, whereas the latter will tell you the average long term price. You may also want to use simple moving averages, but these are not nearly as responsive as the exponential ones.

Mean Reversion Indicators: Bollinger Bands

Bollinger bands are one of our personal favorite mean reversion trading indicators to use. Simply put, Bollinger bands attempt to measure how far a price can go in one direction from a central tendency pivot before there is a reversionary impulse triggered. These bands will also contract or expand based on volatility fluctuations. When it comes down to it, you definitely want to master how to use the Bollinger bands indicator to start performing technical analysis and winning trades.

Relative Strength Indicators: Stochastics

Stochastics is another really important one, and it is a type of RSI or relative strength indicator which identify and measure buy and sell cycles. In terms of the relative strength indicators, this probably the most vital one which you should familiarize yourself with. In case you are confused, remember that joining our Income Mentor Box Day Trading Academy will provide you with unlimited and full access to all of our day trading lessons, where this topic is explained in a much more in depth manner.

Momentum Indicators: MACD

Ok, so this is quite a mouthful, but when it comes to momentum indicators, the most important one you want to be familiar with is Moving Average Convergence, also known as MACD for short. This is a great momentum tool because it measures exactly how fast a market or price is moving and it helps provide you with a way to evaluate and recognize rapid price changes. MACD also attempts to determine when natural price turning points will be. In our opinion, it’s one of the most useful trading indicators out there.

Volume Indicators: OBV (On Balance Volume)

In terms of the final category of the major technical analysis tool you should be familiar with, it is the OBV or on balance volume. This is a type of volume indicator which uses the flow of volume to predict the changes in a stock or security price. It’s definitely a useful one to have in your arsenal.

 

Best Indicators For Forex Trading – Conclusion

There you have it folks, the 5 best trading indicators that you want to use for Forex and more. Now, we know that this is one of the more complicated aspects of day trading. There is no getting around the fact that these materials are quite dense.

Based purely on this one article alone, you probably don’t know how to use any of them yet. However, this is why we have our Income Mentor Box Day Trading Academy. If you join us, you will learn how to use all of these trading indicators to the fullest of their potential.