Forex 101 - Technical Indicators

November 14, 2016

Welcome to our Forex 101 Technical Indicators post. In this post, we will endeavour to teach you the basics of technical indicators and how they can be used in Forex trading. There will be several posts that lead on from this one, links and details can be found on our Forex 101 Indicator Basics page.

 

What are indicators?

 

Technical indicators formulate price data and display the results as overlays on price charts (i.e fancy lines, waves, arrows and other drawings). There are countless indicators available when trading Forex, our website will share some of the popular indicators and how you can use them in your Forex trading analysis.

 

Below is a screenshot of a 1 hour EURUSD price chart with some popular indicators...

 

 

Why use indicators?

 

Analysing charts using price action is the foundation of chart analysis (if you need a refresher, take our Forex Price Action Course). Technical indicators can be used to support and/or confirm your price action analysis and can help identify potential price behaviour that you may have missed. Technical indicators can be used to spot price trends, ranges, market momentum and price reversals.

 

What types of indicators are there?

 

Leading indicators can signal potential market movement before it happens.

 

Lagging indicators signal a market movement that has already happened.

 

You may be thinking, 'I am only going to use leading indicators. This way I can get on every trend early and make lot's of money'. The truth is, indicators are not that reliable. They should be used as a confirmation of price action analysis or as part of a trading strategy - not as the strategy.

 

 

Do I have to use technical indicators in Forex trading?

 

No. Some technical analysts and traders focus on price action only. It is purely a personal preference whether to use indicators or not but we suggest that you at least learn the basics of indicator analysis before making-up your mind. Some traders believe that technical indicators can distract from price action.

 

What next?

 

Go to our Forex Indicator Basics page and click on the relevant links.

Please reload

There is a very high degree of risk involved in trading.Past results are not indicative of future returns. Technical Forex and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice.Information for forex trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Technical Forex may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading Forex, Options on Forex, and any retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Technical Forex is not an investment advisory service, is not an investment adviser, and does not provide personalized financial advice or act as a financial advisor. Technical Forex exists for educational purposes only, and the materials and information continued herein are for general informational purposes only. None of the information provided in the website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, recommendation or sponsorship of any company, security, or fund. The information on the website should not be relied upon for purposes of transacting securities or other investments. You hereby understand and agree that Technical Forex does not offer or provide tax, legal or investment advice and that you are responsible for consulting tax, legal, or financial professionals before acting on any information provided herein.

Technical Forex is dedicated to providing high quality content on Forex technical analysis - info@technicalforex.com

© 2015-2020 TECHNICAL FOREX