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Looking at the Best Forex Indicators to Maximize Profits

By Ronald Lee Subscribe to RSS | December 19th 2011 | Views:

If you are a novice who has just started trading foreign exchange with the desire to make plenty of money, you should first be aware of the best forex indicators in different categories and their application. If you’re already into this form of trading for quite some time, you should be familiar with the proper combining of forex indicators that can aid you in earning steady profits in the currency market. There are four categories of indicators that are widely utilized by traders and mentioned below.

The first category of the best forex indicators is momentum indicators that are known as strength indicators as well. They indicate the rate of fluctuation of price over a specific time frame. They are similar to oscillators that are able to show whether the foreign exchange market is going through oversold or overbought conditions. In case the indicators attain the overbought area, it signifies that there are tremendous possibilities for the price to descend. On the other hand, if they get to the oversold area, it implies that there is greater chance for prices to ascend. Some of the most popular momentum indicators include Commodity Channel Index (CCI), Relative Strength Index (RSI) and Stochastic.

Devised by Donald Lambert, the CCI indicator is hugely popular for its amazing potentiality and simplicity. The original CCI comprises a solitary line that hovers between +200 and -200. Traders can use it to recognize bullish and bearish market oscillations as well as to determine turning points, strongest and weakest time frames in the market. Experts recommend making use of CCI for entries and exits as soon as the indicator attains +100 or -100.

Trend indicators are the second category of the best forex indicators. Traders should bear in mind that trend is their most trusted companion and they should trade in the direction of the trend only. There are many different trend indicators like Moving Averages, Moving Average Convergence Divergence (MACD), Parabolic SAR, Average Directional Index (ADX), etc. They assist traders in identifying when the trend starts or stops.

The volume indicators are utilized for portraying the amount of trading which happens and reasserting the direction of the trend, a breakout or reversal. The price will go up when the trade volume elevates and low volume may possibly show the reversal in currency trading. If the currency pair is traded in thin range and attains a soaring volume, it shows a breakout. Some widely used volume indicators include Money Flow, Acceleration Bands and Demand Index.

Finally, the fourth category of the best forex indicators is volatility or bands indicators. The alteration in volatility will bring forth an alteration in price. Therefore, traders can discover the activeness of the currency market by observing the price ranges. You shall make an entry into trade if there is favorable fluctuation in price movements that indicate the FX market is active. The most widespread volatility indicators are Bollinger Bands, Average True Range (ATR) and Chandelier Exit.

Ronald Lee - About Author:
Ronald Lee is an expert in a wide range of best forex indicators. His website offers valuable information on the Commodity Channel Index or CCI indicator. Visit the website to learn its benefits and the methods of interpreting it.

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