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So, you’re looking for the best forex indicator that tells you when to place your trades.
It doesn’t exist…
Even though there is no such thing as ‘THE BEST’ indicator, there are options that cater to different trader’s needs differently. In other words, you can say that the best forex indicators are different for each trader.
This post is dedicated to highlighting some of the commonly used indicators in the forex world. We’ll see how traders use them to enhance their performance and attain optimum returns. Excited? Let’s get started…
What is Forex Indicator?
As its name implies, the forex indicator also known as a technical indicator is a forecasting tool that is usually used to predict price fluctuations on the currency market. They are estimations that take into account the volume and price of a particular instrument. By using forex indicators, traders can make profitable decisions about market entry/exit.
The criterion for the Best Forex Indicators
As mentioned above, there is no such thing as the best forex indicator in the world of trading. All indicators are designed to meet a specific purpose and hence all of them acquire worth and value for the traders. Based on your trading approach and expectations, you can however pick one most suitable option for yourself.
The Best Forex Indicator is Different for Each Trader
Not all traders are alike. Obviously, each one of them has a different goal and a unique strategy to follow. Based on their trading approach, they pick the right set of tools that guarantee great results in the shortest possible time.
Some traders are interested in knowing about the market direction than any other thing and hence pick trend indicators for their trades. Similarly, some are more interested in gauging momentum and pick indicators that can measure the strength of the trend. Some traders choose indicators to measure market volatility as according to them this information can help them stay ahead of the trading game. All in all, the indicator that helps you beat your biggest trading fears is the one you should trust for your trading business.
Some Traders Want Signal Indicators
There are traders that subscribe to the forex signal providers that forward useful market info in the form of email, SMS, telegram, or a Whatsapp message. These companies acquire professional analysts and statisticians who conduct market research on behalf of the trader by using different technical indicators available on the market.
If selected wisely, these signal indicators can be of great help as it notifies when to open or close the trade for great returns. Selecting the right service is crucial though as your own involvement in the process will be near to zero and you’ll be totally relying on the information provided by your service provider? Keep in mind, not all currently available options worth your time and money. So, make sure you pick the best possible option for yourself.
Other Traders Want Analysis Indicators
Then there is a group that takes their trading very seriously and looks for options that can help them foresee what their future trades have in store for them. Instead of hiring any signals company, they buy indicators for themselves and conduct their own research. This option is especially suitable for seasoned traders as it takes a lot of interpretation capacities to know what your indicator is trying to indicate for you.
There are different indicators available. For instance, you can have an SMA (Simple Moving Average) to weave out price movements in order to effectively recognize the trend. Noticeably, SMA is a lagging indicator and it includes prices from the previous stats and provides a signal afterward.
MACD is another indicator type that is designed to gauge momentum. If a trader is looking to identify a trend with the help of a volatility channel, the Bollinger Band is perhaps the best available solution. Similarly, Fibonacci Retracement revolves around the idea of having an augmented chance of retracing by specific parameters when a market confronts with an extreme move. Those looking to focus on the most recent prices should take help from EMA as it generally responds faster to price fluctuations than any other indicator.
Find out Which We Believe is Best Here
Well, both these options come with their own pros and cons. If you’re a beginner with zero trading knowledge, it would be better to invest in signals indicators as you’ll get researched concise information on your preferred medium on the basis of which you can make your trading decision. However, if you know your work and just want to get a hint about future price movements, simple technical indicators would be a perfect choice.
In conclusion, forex indicators are a great option that helps traders streamline their trading operations. As these signals provide insightful information about current and forthcoming market trends, traders can make the right trading decision at the right time that curtails chances of loss and ensure good returns.