What indicators choose Forex traders (Part 2)
Earlier, we considered technical indicators and their features, noted the significance of their settings depending on the trading timeframe.
Continuing the theme of popular Forex indicators, it is worth to note that the lion’s share of them came from the stock market, bonds and the commodity market. This had an influence on various indicators. It is also worth noting that most of the basic principles laid down in popular indicators since the 70s and 80s. Therefore, they can be considered time-tested.
The simplest and most common Forex indicator is the Moving Average (MA). For simplicity, it is called MA. MA refers to trend indicators, often used in the form of several lines with different periods. The most popular MA periods: 9, 13, 55, 100, 165, 200 and others.
One of the popular varieties of the Moving Average (MA) is the Exponential Moving Average (EMA). Also, based on moving averages and their varieties, there are a significant number of other indicators that maintain the basic principle of MA.
Fig. 1. MA (The blue line is MA 200, the red line is MA 55, the green line is MA 13 and the yellow line is MA 9)
MACD (Moving Average Convergence Divergence) refers to oscillators, based on the Exponential Moving Average, EMA. The indicator is leading and is widely used by traders to determine price reversals and trend strengths.
Fig. 2. MACD
Ichimoku kinko hyo
Ichimoku Kinko Hyo is a trend complex indicator that can be used both independently and with other indicators. The lines of the Ichimoku indicator are analogous to the moving average and are calculated with the ratio of the difference between the current price and the N-th period.
Fig. 3. Ichimoku Kinko Hyo
Such indicators as RSI, Stochastic Oscillator, Parabolic SAR, Fractals and Bollinger Bands need a separate mention. They are common among beginners and experienced traders. At the same time, the technical approach of the above indicators is very different. But this does not interfere with their use in trading in various combinations. This allows you to choose something worthwhile for yourself.