| During your courses in currency trading, you will | | | | determine how and if the trend will change. Of |
| inevitably need a basic understanding of the four | | | | course that goes to say that a longer time period |
| groups of technical analysis, and a couple of indicators | | | | chosen will result in less fluctuation, therefore easier |
| used in each. Dozens of technical indicators exist, but | | | | to predict. |
| as a new trader, or any trader, you do not need to | | | | A few of the indicators are: MACD-Moving Average |
| study every indicator known to man. You should | | | | Convergence/Divergence, Moving Average Indicator, |
| though, have at least one indicator for each group to | | | | Forecast Oscillator and Parabolic SAR |
| obtain an overall view of market conditions. | | | | Volatility indicators measure how active a market is |
| The principal purpose of most technical indicators is | | | | as reflected by the size of price ranges without |
| to determine the trend, by watching a combination | | | | specifying a price direction. This is useful because a |
| of volume, price, and other indicators. This is not an | | | | sudden change in volatility levels can often lead to a |
| accurate science because the trend can change | | | | major price move. They are indicators used to |
| according to market statistics, positions of traders, or | | | | describe the magnitude of day-to-day fluctuations in |
| any significant change in any economic situation. | | | | prices. When applying volatility indicators to a price |
| Know These 4 Groups Before Taking Courses in | | | | chart, you can see how active a market is as from |
| Currency Trading | | | | the size of price ranges without specifying a price |
| The four indicator groups are:momentum - trend - | | | | direction. A few of the indicators are: |
| volatility - volume | | | | Bolinger Bands, Average True Range-ATR, Bollinger |
| Momentum indicators are used to indicate the speed | | | | Bands (BB), Trading Bands, Volatility Chaikin's. |
| or velocity of change in price from recordings over a | | | | Volume indicators show the volume and weight of |
| certain time period in the past. They tell us if a | | | | trades behind a particular move in price. They |
| currency or a market has risen to its overbought | | | | measure the the amount of buyers and sellers |
| zone, or fallen to its oversold zone. A few of the | | | | responsible behind market moves. They confirm the |
| indicators are: CCI-Commodity Channel Index, | | | | trend and the buying or selling pressure in that trend |
| RSI-Relative Strength Index, CMO-Chande's | | | | direction. As volume increases, prices usually also |
| Momentum Oscillator, and Stochastics. | | | | increase The absence of confirmation may warn of a |
| Trend indicators are used to identify the direction of | | | | reversal. A few of the indicators are: |
| trends. The Moving Average is the most basic | | | | Chaiken Money Flow, Force Index ,Demand Index, |
| indicator because it smooths price action into a signle | | | | Ease of Movement, On Balance Volume (OBV), |
| line. By averaging the data, a smoother line is | | | | Volume Rate-of-Change (ROC). |
| produced, making it much easier to view the | | | | Trade indicators work well when there is some |
| underlying trend. Depending what time period you | | | | continuity and predictability of the market direction. |
| use, minutes, days, months, in addition to the type of | | | | Like most indicators, they best used in conjunction |
| chart, daily, weekly, monthly, the trend line will exhibit | | | | with others. In the end, they're only an aid to assist |
| different variations. A shorter time period used, will | | | | traders to make informed decisions, but even so, |
| result in greater variations, making it more difficult to | | | | they're extremely useful as a whole. |