Best forex brokers 2017 / Forex indicators: Comparison and Strategy

Forex indicators: Comparison and Strategy

A Forex indicators strategy provides objective trade signals and can be implemented either manually or automatically. With Forex indicators helps to follow very different strategic approaches.The performance of strategies is measured by several indicators. The quintessence of all forex indicators is derived from the market value, which is updated over a long period constitutes a separate line and can be displayed graphically with a chart program. Modern charting programs include at least a few dozen, often even several hundred Forex indicators. An indicator has certain properties, where a significant explanatory power is attributed with regard to the future market development.

1. Moving averages and Forex indicators Comparison

Indicators can be broadly divided into the following trend indicators and oscillators. The simplest conceivable (trend following) indicator is a simple moving average with n periods. They are calculated to be the last n period closing prices (sometimes or at appropriate parameter settings also central, high or low rates) and dividing by n. Moving averages are in this form smoothed trend lines provide compared with this but a great advantage: it can be integrated into commercial systems.

Conclusion: Basically Forex indicators can be divided into lagging indicators and oscillators. Among the simplest trend following indicators this part of the simple moving average with n-periods, which with its smoothed trend lines easily can be integrated into commercial systems.

2. MACD Strategy

2. A Forex Indicators Explained MACD Strategy

The most popular trend-following indicator is the MACD, which consists of three exponentially weighted moving averages. When weighted averages younger courses flowing strongly in the indicator calculation than older courses. This makes the average more sensitive to market movements. The MACD appears in the chart in the form of two lines. The MACD line is in the default settings of most charting programs the difference between a 12-period and 26-period average. If the line increases, the distance between the two averages is growing. The second line is (again based on the default settings) a 9-period average (also exponentially weighted) of the MACD line. The signal line thus less sensitive to market movements than the MACD line. Thwarted the MACD line the signal line from bottom to top there is a long signal. If the MACD line from the top under the signal line is the one with short signal.

The unnecessary at first glance complicated construction of the MACD is a response to a fundamental conflict in goals (mainly trend following) indicators. A trend-following indicator could be depending on the selected input period and construct the weighting either «slow» or «sensitive». A «carrier» indicator only provides a trading signal when an established trend is already well advanced — that the hit rate is then relatively high (because established trends rare break). A «sensitive» indicator provides much earlier signals from which, however, a greater number ultimately proves to be «false alarm».Generally provide lagging indicators in trending markets good, in trendless phase contrast weak results. Therefore, the indicators are rarely used without an additional filter.

Conclusion: The forex indicator «MACD» consists of three exponentially weighted moving averages and will appear in the chart in the form of two different colored lines. The function of this forex indicator is quite simple: Cross MACD line, the signal line from bottom to top, there is a long signal before — they thwarted them from top to bottom, the trader should therefore go short.Nevertheless, a trend-following indicator like the MACD is usually used in conjunction with confirmation indicators as trend-following indicators do not always provide accurate results.

3. Comparison of the Oscillators in Forex

3. Oscillators in Forex indicators Comparison

The second important indicators type are oscillators. Oscillators provide indications of overbought and oversold market conditions. Oscillators based on the inner strength of a trend, which is also referred to as a momentum. The basic problem is to set the strength of a trend in relation to the momentum properties of the trend. If this fails, point oscillators at a very early stage of trends overbought and oversold situations. Among the best known oscillators is one developed by Welles Wilder RSI(Relative Strength Index are not to be confused with the relative strength in several markets compared). The RSI is defined as the ratio of profits and losses of a market on a closing basis for a certain period (in the default settings is 14 days available). The RSI is scaled so that it can only have a value between 0 and 100. With a value of more than 70, the market is considered overbought at values below 30 as oversold.

Conclusion: In addition to the moving averages and oscillators are the most important Forex indicators Trader: oscillators, which include for example also the Relative Strenght Index (RSI) is one, provide valuable information on oversold and overbought market conditions, of which mainly traders with Trendumkehr- benefit strategy.

4. Five most popular Forex indicators at a glance

To illustrate the benefits of different Forex indicators exactly we here now just the five most popular Forex indicators of traders and explain briefly their function.

1. Bollinger Bands

With the Bollinger Bands Trader determine the current market volatility. In a low market volatility could cause the belts, with increasing volatility, they widen accordingly — beyond the outer edges of the Bollinger bands can also serve as support and resistance levels are used.

2. MACD

The function of the MACD we have already extensively explained, however this forex indicator is one of the most popular indicators of traders. They can use it to identify trends and trend reversal early on and respond accordingly in Forex trading, once one of the MAs crossed the other.

3. Parabolic SAR

The Parabolic SAR strategy (SAR = Stop and Reversal) is based primarily of points that appear above or below the current price. Using these points determine Trader trend reversal and the Stop Loss. The SAR works it best in trending markets.

4. Stochastic

Of course, should the Stochastic in our Forex indicators compared not missing: The Stochastic shows the trader if the price of a financial product is currently oversold or overbought by dividing the chart into three areas. If the price falls below the 20-mark, the trader should buy — he rises above the 80-mark, this is a sell signal.

5. RSI

Also on the Relative Strength Index, we have already been received: Also the RSI shows overbought and oversold situations, similar to the Stochastic, but beyond that the RSI can be used as trend confirmation. Moves the price rises above the 50 mark, is an uptrend, at a price below the 50 mark accordingly a downtrend. Among the five most popular Forex indicators course include the MACD and the RSI, we have already mentioned above, but in addition, traders are convinced of the Stochastic, the Parabolic SAR and Bollinger bands. Each of these forex indicators can in different market situations contribute to a better understanding and help to develop promising trading strategies.

4. The five most popular Forex indicators at a glance

5. Three top Forex brokers from our comparison

Prefer the trader now try our featured Forex indicators by comparing the same self, we can imagine him just our three top Forex Broker Broker Forex from our test:


Plus500
  • Demo account with no time limit
  • Minimum deposit of 100 €
  • Almost 50 available currency pairs

IronFX
  • Demo account with no time limit
  • Over 200 tradable underlyings
  • Two different market models to choose from

IG
  • Foundation in 1974 and regulated by the FCA
  • No minimum deposit
  • Comprehensive Mobile Trading Offer

6) Conclusion: There are numerous Forex indicators available

Good Forex indicators are almost essential for a successful currency trading — and is therefore the traders also a particularly extensive selection of indicators available: indicators such as Bollinger Bands, MACD, Parabolic SAR, Stochastic or RSI can in the groups «trend-following indicators» and «oscillators» are divided and thus contribute to a more successful Forex trading — if one knows how to deal with it.

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