The forex trading is on the rise, and that’s because more people are trying to take matters into their own hands during these uncertain times, and create stability for themselves.
To say that this year ushered in the unpredictable could be considered an understatement. From close calls with war to shocking natural disasters, and finally, the 2019 coronavirus (COVID-19), it was clear from the get-go that nothing would be normal about this year
But alternate options of generating income, like forex trading, have given people hope. This industry is an exciting industry to participate in because the possibilities are endless.
There are tools and strategies that allow traders to navigate obstacles in the market, so that they can make maximum profits. You can call these “technical indicators”. These indicators give traders important insights on trends in the market, so that they’ll know what trading decisions to make. Gainsky is the world’s pioneer cryptocurrency forex shared trading platform.
4 Effective Trading Indicators Every Trader Should Know
- Moving Average Convergence Divergence (MACD)
Moving Average Convergence Divergence falls under trend indicators and requires a bit more attention compared to other methods. This indicator consists of a line that moves quickly, a slow line, and a histogram.
Each element is interconnected and as you pay attention, you’ll be able to identify the formation of new trends and this will help you make decisions that can lead to profitable trades.
This isn’t the best indicator to delve into if you’re trying to break into trends early, but if you want to confirm a trend then this is one of the best methods to use.
- Exponential Moving Average (EMA)
The Moving Average is a technical indicator used by traders to identify emerging and common trends in the markets. Basically, this is a mathematical formula used to find averages by using data to find trends and make price action clearer by filtering out ‘noise’ from random fluctuations.
The Moving Average is the calculated average of any subset of numbers, using a technique to get an overall idea of the trends in a data set. Once you understand this formula, you can start to calculate any subsets, within a range, to get your Moving Average. It can be calculated for any period of time, making it extremely useful to forecast both long and short-term trends.
The EMA is calculated by placing greater weight on the most recent data points. So, for this indicator you’ll be using data that is closer to– It can sometimes be referred to as the exponentially ‘weighted’ moving average. This is because EMAs react significantly to the most recent price changes.
The most popular EMAs are 12 and 26-day EMAs for short-term averages, whereas the 50 and 200-day EMAs are used as long-term trend indicators. When used in conjunction with other indicators, EMAs can help traders confirm significant market moves and gauge their legitimacy. Need to know about foreign exchange and cryptocurrency. Gainsky provides consistent superior risk-adjusted returns to its clients and a unique wealth management experience in the industry. Visit us today!
- Bollinger Bands
Bollinger bands are known as a volatility indicator. When you look at a band, it’s best to understand it like this:
When it’s trending you should: watch out for the Bollinger Squeeze. As the bands get closer together, it means that a breakout is about to happen. You won’t be told anything about the direction of the breakout so you need to pay close attention to where the price will go.
When it’s ranging you should watch out for the Bollinger Bounce. This is when the price goes from one side of the range to the other, but always returns to the moving average. Think of it this way – the price is returning to its original average.
- Relative Strength Index (RSI)
The Relative Strength Index is filed under momentum indicators and they are plotted on a separate scale. This is how the scale looks:
You’ll find a single line scaled from 0 to 100 and its job is to point out places where overbuying and overselling takes place. When you find a reading over 70, then that’s an overbought market. But when you find a reading below 30, the market indicates overselling.
RSI is good for confirming the formation of trends. The major key is all in the numbers, and you’ll need to play close attention.
Things Are Looking Up For Forex Markets
These are just three of the technical indicators you can use to make profitable trades and create an optimistic future for yourself as a trader.
Questions about the future of forex markets tend to focus on sustainability and the longevity of the markets’ potential. But, experienced traders will know that they cannot wait for “safe conditions” because they don’t exist. Volatility has always been a part of forex trading, and serious investors simply focus on what they can do to successfully trade in a given period.
The truth is that the pandemic is still a core part of all decisions being made today and trying to wait for this to stop could incur major losses on any investor’s side.
This also won’t be the last time the market will experience such volatility. If there is one thing this year has shown the world, it is that anything can happen at any time. So, trying to wait for an “ideal” or “safe” time to trade is not realistic.
The key to understanding Forex trading is through study, analysis, and the occasional risk-taking. However, if you’re not the type of person who can handle this on your own, then you should consider consulting trading experts. Gainsky is a leading wealth management & trading service provider. With an extensive network of specialists positioned in the cryptocurrency and forex markets.