Tools Tools Tools. Featured Portfolios Van Meerten Portfolio. Market: Market:. Currencies Menu. Forex Market Map. Wed, Mar 31st, Help. Log In Sign Up. Stocks Market Pulse. ETFs Market Pulse. Options Market Pulse. Upcoming Earnings Stocks by Sector. Futures Market Pulse. Trading Guide Historical Performance. European Futures Trading Guide. European Trading Guide Historical Performance. The Forex markets tend to behave in certain ways under certain conditions. Proponents of technical analysis trade under the assumption that this behaviour repeats itself and thus certain price patterns will occur time and again.

Forex indicators are used to help recognise and exploit such patterns as they form. There are a lot of contenders for the most popular trading indicator. In this section, we will take an in depth look at five of the most important indictors for both beginner and professional traders alike. A Simple Moving Average SMA is a continuously calculated value of the mean average closing price over a specified time period. As implied by the word 'moving', each time the time frame advances, we calculate a new value to reflect the changes in price.

For example, the day moving average is the mean average of the closing prices for the previous 20 days.

The value is calculated each day, discarding the oldest figure in favour of the newly available daily closing price. The purpose of the SMA is to smooth out price movements in order to better identify the trend.

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The SMA is a lagging indicator, meaning that it incorporates prices from the past and, therefore, provides a signal after the trend begins. The longer the time period of the SMA, the greater the smoothing and the slower the reaction to changes in the market. For this reason, the SMA, like other lagging indicators, is not the best trading indicator for receiving advanced warning of a movement in the market. That being said, the SMA is one of the best Forex indicators when it comes to confirming a trend. It often operates as one of multiple SMAs on the same chart with different time periods — one or more with a shorter time period and one with a longer time period.

The SMA signals a new trend may be starting when the short-term average crosses over the long-term average.

If the short-term average is moving above the long-term average, this may signal the beginning of an uptrend. If the long-term average is moving above the short-term average, this may signal the beginning of a downtrend. You can experiment with different period lengths to find out what works best for you.

Types of Indicators

Whilst similar to the simple moving average, the Exponential Moving Average EMA works out the average price over a specified time period but gives a higher weighting to the more recent price values. The amount by which this weighting decreases for each successively older price value is exponential, hence the name. This means that the EMA will respond more quickly to price changes.

A very simple Forex trading strategy using a combination of two moving averages, is to trade each time the moving averages cross. With this system, you will always have a position, either long or short for the currency pair being traded. You then exit your trade when the shorter MA crosses the longer MA. The next step is to place a new trade in the opposite direction to the one you have just exited.

The top Forex indicators | Which ones predict future prices better?

By doing this, you are effectively squaring and reversing. Date Range: 3 February - 26 March Date Captured 26 March Past performance is not necessarily an indication of future performance. If you do not want to be in the market all the time, this is not going to be the best Forex indicator trading strategy for you. In that case, a combination using a third MA might suit you better. A triple moving average strategy uses a third MA. The longest time frame acts as a trend filter. When the shortest MA crosses the middle one, you do not always place the trade.

The filter says that you can only place long trades when both shorter MAs are above the longest MA. You can only go short when both are below the longest MA. Benefit from the most advanced Forex indicators and improve your overall trading experience with the Supreme Edition add-on for MT4 and MT5 exclusively from Admirals! This advanced version of MetaTrader offers excellent additional features such as the correlation matrix, which enables you to view and contrast various currency pairs in real-time, or the mini trader widget - which allows you to buy or sell via a small window while you continue with everything else you need to do.

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Date Range: 18 March - 26 March Not only does it identify a trend, but it also attempts to measure the strength of the trend. These indicators can determine the direction to trade before the new trend has even started. If leading indicators are able to signal trades in advance, before the trend has started, then we all would be extremely rich by now, which is not the case.

The downside is that leading indicators are infamous for their many false signals. A novice trader probably would have sold once the RSI entered in overbought territory, which would have caused him to lose money. With experience, the trader will learn to time their entries and exits with a sense of precision. A lagging technical indicator, as its name suggests, is delayed from the current market price. Usually, the lag is caused by using bigger price data inputs in their calculation. But, a lagging indicator can be extremely helpful in gauging the market trend. The whole idea of using a lagging indicator for trend determination is that they remove a lot of the market noise that is inherited in the price and gives you a much better idea of the trend.

But, the downside is that a lagging indicator will only alert you about a trend after the trend has started.

TOPTREND indicator

In this case, by using a lagging indicator to trade you miss a good part of the potential profit. The classic moving average crossover system is a good example of how lagging indicators signal the shift in market sentiment after the new trend has started see Forex chart below. A confirming technical indicator can be extremely useful to validate your price analysis. As its name suggests, confirming indicators are only used to confirm that reading of price action is correct. Volume indicators are incredibly useful. The way one will use and interpret the OBV readings is quite simple.

What drives the trend are buyers and sellers and their aggressiveness and in this regard, the volume should increase when the market moves in an uptrend or in a downtrend. In the example below, if for whatever reasons, you would conclude that the uptrend will reverse, then by using the OBV indicator it would have confirmed your analysis.

The uptrend was lacking momentum as buyers were not buying this uptrend as indicated by the OBV indicator. Understanding the differences and the similarities between the three types of technical indicators can help you better read the information they provide and then decide how to trade. The best trading indicator for you will depend on your trading goals.

In addition, you can also use functional indicators like for example, the Forex bar timer indicator. The candle timer indicator simply counts down the time until the next candle opens. The FX trend indicator day moving average is considered to be the best trend indicator out there. For example, if you were looking at a day Moving Average. What are you going to be plotting on your chart is a moving point that looks at the last closing prices and then plots the average price. This way you can eliminate a lot of the noise that is inherited in your price chart and gives you a much simpler view of what is going on in the market.

Get to know the best Forex Trading Indicators

A moving average is really an easy way to identify and provide a little bit of definition to the trend. Because a moving average can gauge the trend direction they are also called a trending indicator see Forex chart below. The slope of the moving average and where the price is in relationship to the MA will dictate the trend direction. The Forex volume indicators are used as a confirmation tool to confirm the trend. Moreover, the volume indicator is so versatile that it can also be used to confirm a Forex breakout. Identifying breakouts will allow you to trade ahead of the market. The volume indicators can help us better understand how healthy and secure the trend is.