Definitely no Forex traders want to lose money; as a result, they often use Forex indicators for this exact purpose. Basically there are four categories of Forex indicators often used to identify and create patterns in the marketplace trend indicators, volatility indicators, momentum indicators and volume indicators.
It’s important to know a truth that Forex indicators are not tools to predict the market; they are actually used to reflect price data so that Forex traders can identify possible opportunities which they can then exploit to make a profit. In other words, Forex traders do not have another choice but have to understand each category so that they are more likely to trade successfully.
Forex Indicator No.1: Trend Indicators
Forex trend indicators are popular among a lot of traders as they allow the trader to visualize trends in the market. They essentially track three types of price movement: whether it is going down, going up or trending sideways. As its name implies, a “trend” shows the Forex market’s activity over a certain period of time.
Forex Indicator No.2: Volatility Indicators
Volatility indicators are designed to indicate the magnitude and size of price fluctuations. In all markets there are sections of high volatility and low volatility which come in waves which are why Forex charts always follow a wave pattern. Forex volatility indicators tracked the intensity of these price fluctuations and in doing so they can probably give traders general ideas of where is the Forex market going next.
Forex Indicator No.3: Momentum Indicators
In the same way that volatility indicators track the intensity of price fluctuations, Forex momentum indicators record the speed at which prices move over a certain period of time. Momentum indicators also track how strong or weak a trend is.
Forex Indicator No.4: Volume Indicators
This classification of indicators are used to gauge investors interest in the Forex market, with a high volume of trades indicating a possible start of a new trend and low volume implying that there is little or no interest in a specific market.
Generally understand different kinds of Forex indicators will always do you good if you want to be constant profit making traders. It is so important for you to work on your Forex trading strategy and then choose the Forex indicators that suit you best!