| The only way you can succeed in doing trading on | | | | Logically, you execute a buying order when the price |
| the foreign exchange market is to do some forex | | | | reaches the lower Bollinger Band and a selling order |
| technical analysis. Technical analysis involves reading | | | | when the price reaches the upper Bollinger Band. The |
| particular forex indicators to project certain market | | | | Squeeze, on the other hand, is usually used to ride on |
| movements and to time your trades properly. Any | | | | breakouts as they appear. |
| forex trader that does not do forex technical analysis | | | | 2. Stochastics - These forex indicators is used to |
| is set for big losses. Forex technical analysis allows | | | | show whether the market is overbought or oversold. |
| you to look at the market fundamentals and cross | | | | In any one of these scenarios, there are |
| check it with the human component of the forex | | | | opportunities for major trades. In a market that is |
| equation. That is, how other traders will react to the | | | | overbought and moving average lines are upwards of |
| movements in the market. Looking at forex charts | | | | 70, it is a good time to sell. Inversely, in a market |
| and forex indicators will give you a graphical | | | | that is oversold and the moving average lines are |
| representation of these market movements and | | | | downwards of 30, it is time to buy. |
| then given your understanding of human behaviour, | | | | 3. Relative Strength Index - Otherwise called as the |
| project whether your trades are likely to go in one | | | | RSI, this indicator also indicates a market that is |
| direction or another. | | | | overbought or oversold. Its upper and lower limits are |
| There are a number of forex indicators as you will | | | | 80 and 20 respectively. The RSI is usually used to |
| learn from your basic forex trading education. Some | | | | look for trends in the market. When a trend is |
| of these are the Bollinger Bands, the Stochastics, the | | | | forming, it would be good to enter a trade at a time |
| Relative Strength Indices, and the MACDs. Chances | | | | when the RSI is either below or above 50. |
| are, you will be using a combination of these forex | | | | Which ones of these forex technical analysis tools |
| indicators. The following details three of these forex | | | | you use will depend on the kind of trader you are |
| market indicators to help you choose which one to | | | | and what your trading strategy is. There is no way |
| use in your forex trading. | | | | you get into a long term profitable forex trading |
| 1. Bollinger Bands - These forex indicators are used to | | | | business without getting into forex technical analysis. |
| measure how volatile the market is. Two common | | | | It could be quite tricky to do forex technical analysis |
| strategies are executed using this indicator: the | | | | especially to new traders and it could take some |
| Bollinger Bounce and the Bollinger Squeeze. In the | | | | amount of practice before you get comfortable. |
| bounce, the basic premise is that the price usually | | | | Persistency and quick thinking would be to your favor |
| tends to go back to the middle of the bands. | | | | when trying to master forex technical analysis. |