Forex Trading Indicators
Forex trading platforms are a great source to make money from financial trading. There are many tools and trading indicators in the forex market that provide a reliable direction of price. However, it is often very challenging for beginner traders to find the right trading tools. Some trading instruments might be suitable for professional traders, which might not be profitable for beginner traders.
Therefore, many beginner traders fail to continue trading for the lack of a guide to choosing the best forex indicators for beginners. Here we will see the best forex indicators for Beginners that might help traders create a profitable trading journey.
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Forex indicators that are easy to understand and work in all timeframes are best for beginner traders. Therefore, in this section, we will see trading indicators that are straightforward and work well for all traders’ level. You can use these indicators in any timeframe and trading platform and the direct download of these trading indicators.
The moving average is one of the most used trading indicators in the world. Beginner to expert, all levels of traders use this trading indicator in their trading strategy. Moreover, the use of this trading indicator differs from trader to trader. Beginner traders should use the simple moving average to identify the major market trend and an Exponential Moving Average to identify the trading entry.
The simple moving average Is the average of the last number of candles. For example, if the price is trading above the 200 moving average, it is an indication that buyers dominated the price during the last 200 candles. The same theory applies to the sell trend, where if the price moves below the 100 moving average, it is a sign that sellers controlled the price. The higher number of candles provides higher accuracy of market sentiment.
On the other hand, the exponential moving average focuses on the most recent movement, which is very useful to identify trading entries in a lower time frame with fewer candles.
Beginner traders can use a simple moving average to identify the Trend and use the exponential moving average to enter the trade towards the major Trend.
The Bollinger bands are a Forex trading indicator with three significant elements- the upper band, the lower band, and the middle band.
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Three lines in Bollinger bands move with the price and worked as a dynamic support and resistance level. If the price is moving upside, rejection from the lower Bollinger band indicates a potential bullish movement. In that case, traders should understand the market context to measure the overall price direction.
When the price faces a bullish or bearish impulsive pressure, the lower band and upper band expand and indicate current trend continuation. When the lower band and the upper bank squeezes, it indicates a correction.
However, for beginner traders, the best way to use the Bollinger Bands as dynamic support and resistance level. In that case, traders can move to a higher frame to understand the market direction and come back to a lower time frame and identify the trading entry based on the Bollinger band’s price action.
MACD or the moving average convergence and divergence is a trading indicator from the oscillator class. There are many ways to use MACD in the trading strategy, but it is recommended for beginner traders to use this indicator to identify the trade continuation and divergence.
In MACD, there is a histogram that moves below and above the zero lines. If the histogram moves below the zero lines, it indicates bearish market sentiment. On the other hand, if the histogram moves above the zero lines, it indicates bullish price action in the market.
Besides the histogram, there is an exponential moving average in the MACD that often create divergence with the price. When the price moves up, it creates higher highs, and when it moves down, it creates lower lows. In that case, the exponential moving average follows the same direction of the price by creating a lower low or higher high.
However, there is some market condition where the price may create higher highs, but the histogram does not follow. It is known as regular market divergence, which indicates the possibility of potential market reversal. For beginner traders, any divergence from an important static support and resistance level and towards the direction of a higher timeframe provides a reliable trading signal.
Relative Strength Index
Relative strength index (RSI) is a trading indicator that provides a reliable trading signal in all timeframe. Moreover, this trading indicator is easy to understand that might help beginner traders to identify the profit-taking zone.
The RSI moves between 0 to 100 levels. When RSI moves down below 30 levels, it will provide a possibility of bullish movement. Similarly, if the RSI moves above the 70 levels, it would indicate the upcoming bearish movement.
Overall, it is better to use RSI as a secondary indicator to determine the profit taking level when it moves below 30 or above 70. The main lacking of RSI is that it provides false trading signals when the price mace extreme bullish and bearish impulsive pressure.
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Fibonacci is a significant trading indicator for beginner traders. Fibonacci determines the correction and extension of the current Trend.
Moreover, Fibonacci’s golden ratio, which is the 61.8% correction, is a significant level that provides the most reliable trading result. The uniqueness of the golden ratio is that it is found everywhere, from DNA formation to galaxy formation.
Therefore, any correction from the 61.8% Fibonacci level provides a good trading entry where the 161.8% extension level works as an essential profit-taking zone.
Identifying the best forex signals is challenging for beginner traders. However, if you have gone through the above section, you would know the best forex indicators for beginners and their unique features. However, there are more trading indicators that might be helpful for traders. You can download all these trading indicators from bestforexmt4indicators.com.
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