Online Share Trading

Top 10 Forex Indicators every Trader should know.

Forex traders will need to stay in touch with several indicators that can help them determine when they should sell or buy. These indicators are an essential part of technical analysis. These are the top forex indicators every trader needs to know:

Moving Average (MA) : This is an essential indicator. Moving average shows the average price over a specified period. The price moves above the moving average to indicate that buyers are controlling the price. Sellers control the price if it trades below MA.

Bollinger Bands: This indicator can be used to measure the volatility of a security's price. Bollinger band have three parts: the upper, middle, and lower bands. These bands are used to identify situations that are oversold or too bought. These bands help to identify exit and entry points for trades.

ATR (average true range): This indicator is used to identify market volatility. The key element in an ATR is range. Range is the difference between the periodic highs and lows. Range can be used for any trading period, whether intraday or multi-day. True range is used in ATR. TR is the largest measure. It includes the current high-low period, the previous close to the current high, and the prior close to the current low. TR is the absolute value of one of the three largest measures. The moving average of certain TR values is called ATR.

Moving average convergence/divergence or MACD: This is one of the forex indicators that depict the force that is driving the market. This indicator helps to identify when the market is likely to stop moving in one direction and is ready for correction. MACD can be calculated by subtracting the exponential moving mean of the short-term EMA from the long-term EMA. EMA is a type of moving average in which the most recent data has greater importance. MACD = 12-period EMA minus 26,-period EMA.

Fibonacci This tool is used to determine the exact direction of the market. It is the golden ratio 1.618. Forex traders use this tool to spot reversals or areas where profit could be made. Fibonacci levels can be calculated when the market has made a large move up or down, and it looks like it has settled at a specific price level. To spot areas where markets might retrace after a big move, the Fibonacci levels are plotted.

Pivot Point: This indicator displays the demand-supply balance of a pair currency. The pivot point is the level at which the price reaches. This indicates that the demand and supply for that particular pair are equal. The pivot point indicates a greater demand for a currency pairing if the price is higher than the pivot point. It indicates a greater supply if the price falls below the pivot.

Relative strength indicator (RSI) This trading tool belongs to the oscillator group. This indicator is one of the most popular forex indicators. It indicates a temporary oversold or underbought market. A RSI value greater than 70 indicates an overbought market, while a lower value than 30 indicates an oversold market. Some traders use 80 to indicate overbought conditions, while 20 is used for an oversold market.

Parabolic SA: Forex traders use the parabolic stop and reverse indicator to determine the direction of a trend and assess short-term price reversals. It helps to identify entry and exit points. It is a series of dots that appear on a chart, below or above an asset's price. If the dot is lower than the price, it indicates that the price is rising. If the dot is above the price, it indicates that the price is falling.

Stochastic : This indicator is one of the most popular for identifying momentum and oversold/overbought areas. The stochastic oscillator is used to identify potential reversals of trends in forex trading . The momentum can be measured by the comparison of the closing price and trading range for a period.

Donchian Channels: This indicator allows forex traders to understand market volatility and determine the higher or lower price action values. The Donchian channels consist of three lines formed from calculations related to moving averages. The median band has two upper and lower bands. The Donchian channel is the area between the upper and lower bands.


Forex indicators are useful for traders who trade in the forex markets with more confidence. Forex market behavior is different in certain circumstances. Having access to indicators allows traders to identify patterns and make informed decisions.


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