Top 5 trading indicators: how to earn on the Forex market

Working on the Forex market without the help of various trading tools is difficult even for an experienced trader. Therefore, to obtain a stable income, it is necessary to use indicators. They will give the user information about the optimal moment to enter the market, thereby increasing the chances of a good profit. Many hands are available, but experts recommend choosing the most popular ones.

Stochastic

The most famous among all Forex indicators are Stochastic. It is popular with beginners and is trusted by most experienced traders. This became possible due to the efficiency and simplicity of its work. Stochastic developed a long time ago. At the same time, he remains in the top places in various ratings and does not have a worthy alternative. Stochastic is equally well suited for short-term and long-term trading. It shows the user areas where the value of the selected asset is highly overvalued. This information helps to determine the approximate peak values, after which a pullback will inevitably follow. Having this data, a trader can choose the optimal time to enter the market and get the maximum benefit.

Stochastic provides users with the most accurate information. This is proved by numerous positive reviews and a high indicator rating compared to other trading instruments. The only negative point of using Stochastic is the elimination of not only false but also some correct signals. This happens when overbought/oversold levels are adjusted to the user's needs.

Bollinger bands

This trading indicator is a true classic. It was first used several decades ago and immediately became an indispensable trading tool for every trader. After more than 30 years, this indicator remains in demand and benefits thousands of users. The author of this miracle is the well-known financial analyst D. Bollinger. By his last name, this instrument was named.

Bollinger bands are rightfully considered one of the leaders among Forex trading assistants. It is based on unique algorithms that help to determine the price volatility of a traded asset accurately. To display this data, bands that limit the price channel have been used, in which the trend can turn in the other direction. The information received often becomes the basis for choosing the optimal entry point to the market and the right moment to close the deal. When working with Bollinger bands, it is advisable to use stop losses. They will exclude significant financial losses if the price of the traded asset is unpredictable. Among the shortcomings of this indicator, experts and ordinary users call the lack of accounting for the volume of traded assets. In some cases, this leads the trader to make the wrong decisions.

Moving average of oscillator

This complex-named indicator is often abbreviated to OSMA. This name occurs most often and is widely used by traders from different countries. This trading tool is suitable for users with varying levels of skill. It is ineffective at short time intervals. Therefore it is intended for medium-term and long-term transactions. False signals are practically excluded in this case, which will only bring the trader financial losses. If you still need to use OSMA for short-term trades, then you need to combine it with additional analytical tools.

OSMA does a great job. It is suitable for those cases when finding the optimal moment to increase a previously opened position is necessary. In addition, the indicator allows you to determine the divergence between "bulls" and "bears." This information simplifies the decision-making process and increases the percentage of successful transactions.

MACD

MACD is a genuinely versatile trading tool. It effectively performs various tasks, from simple to the most complex. D. Appel created this indicator. Initially, it was used to assess price fluctuations on stock exchanges and build forecasts for the future. However, in the future, with its help, they began to determine the reversal points and check the trend's strength and direction. This versatility has made the MACD an excellent basis for creating many custom trading tools that no trader can do without today.

The indicator will not always be helpful. Experts recommend using it in cases where there are large amplitudes of price fluctuations. You should also remember that you should sell assets when the needle drops below the signal line; when it rises, you should buy. If the MACD intersects with the zero line, this may signify the completion of an increase or decrease in prices. All of the above entails the main disadvantage of the MACD. It informs the trader about each trading opportunity, which creates difficulties in choosing perfect moments for trading and requires additional analysis.

Simple MA

This multi-purpose trading indicator is a must-have for every trader. It is rightfully considered a critical analytical tool and an essential element for creating other trading tools. SMA is a reasonably old indicator. Despite this, it remains in demand among traders with different experiences. A simple moving average is often used to analyze long-term charts taken over several days to 1 month.

SMA is a simple moving average based on an average price per unit of time. Thanks to him, it is possible to track price fluctuations for short periods and identify the trend's direction. Based on this data, traders determine the optimal moment to start buying or selling assets. Like many other trading instruments, the main disadvantage of SMA is the presence of a sufficient number of false signals.

Forex indicators are helpful trading tools that every self-respecting trader should use. With their help, it is possible to find the optimal moment to open a deal, regardless of the chosen strategy. If you learn how to use such auxiliary tools correctly, you can repeatedly increase profits and minimize financial losses.