The indicators are used as filters or confirmation of sgnals obtained directly from observing patterns on the chart. They are not used on their own because a smgle indicator is not a trading system and many traders have lost their money following one indicator. Most indicators are lagging in that they are based on historical data, where as chart patterns predict what may happen in the future
An indicator is a mathematical calculation that can be applied to a currency pair's price and /or volume. The indicator is then plotted on the chart or in a separate window below the chart and is used to anticipate future changes in prices.
There are many different indicators, so we will only cover a few which have provided reliable and profitable to us. Each person will choose a different combination of indicators which they will prefer to use.
There are two groups of indicators- Lagging Indicators and Leading Indicators Lagging indicators
Lagging indicators are best when prices move in relatively long trends. They don't warn you of upcoming changes in prices they smpy tell you what prices are doing (i.e. rising or falling) so that you can invest accordingly.
Trend following indicators have you buying and selling late. In exchange for missmg the eariy opportunities, they greatly reduce your risk by keeping you on the right sde of the market.
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