How and When to Use Key Technical Indicators

By now, you can see that trading forex involves making a sequence of decisions. You begin by first deciding which direction to take the next trade. This decision is based on assessing sentiment and trend direction. The second step is deciding where to enter the trade. Entering the trade off a trend line or Fib line is an example of the basis for this decision. But the third key step is pulling the trigger-deciding to put on the trade. This is where technical indicators come into play and become a critical tool to confirm your analysis and instincts.

The list of potential indicators used to help shape forex analysis is quite extensive. Many technical indicators used for equity and futures markets do not apply to forex because forex trading does not provide volume data. The new trader is likely to become confused as to which indicators to use. This chapter will guide you.

Average True Range Bollinger Bands Commodity Channel Index Envelopes MACD

MACD Histogram Momentum Moving Average Parabolic

Percent R (Williams %R) Rate of Change ( ROC ) Relative Strength Indicator (RSI) Standard Deviation (StdDev) FStoch (Fast Stochastic) SStochastic (Slow Stochastic) Volatility

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