Traditionally there are 4 types of forex indicators (and oscillators)http://www.usfestivals.com each of which gives us specific information on the price trend of an asset:- TREND INDICATORShttp://www.usfestivals.com highlights and there is a clear trend (bullish or bearish)- MOMENTUM INDICATORShttp://www.usfestivals.com highlights the strength of a trend (bullish or bearish)- VOLATILITY INDICATORShttp://www.usfestivals.com highlights how prices are fluctuating- VOLUME INDICATORShttp://www.usfestivals.com shows how many operators are active on the market
As we will see shortlyhttp://www.usfestivals.com some indicators do not fall into just one categoryhttp://www.usfestivals.com but are “hybrids” because they can fall into two categories at the same time.Thushttp://www.usfestivals.com for examplehttp://www.usfestivals.com the famous Bollinger Bandshttp://www.usfestivals.com which are very effective indicators of volatilityhttp://www.usfestivals.com but at the same time also highlight the presence of a trend. We can give an example using the Plus500 webtrader: as you can seehttp://www.usfestivals.com the Bollinger Bands provide us with a clear visual representation of both the price trend (rise / fall) and how large the price fluctuations (volatility) are.
IMPORTANT CLARIFICATION. We must reiterate strongly that each indicator falls into a certain category since it provides us with information on a specific aspect (trendhttp://www.usfestivals.com volatilityhttp://www.usfestivals.com volumeshttp://www.usfestivals.com momentum); we reiterate this because many traders who want to obtain an indication of market entryhttp://www.usfestivals.com make the mistake of using two or more indicators of the same categoryhttp://www.usfestivals.com ending up having the same information twice.How many and which indicators to use are part of a trader’s personal choiceshttp://www.usfestivals.com but the important thing is to know the tools you are usinghttp://www.usfestivals.com so as to avoid duplicating information. Only in this way will the greatest possible benefit be obtained from the use of the most reliable indicators.
Choosing which type of indicator to use is something that is linked to your trading style: it is personal and concerns each individual trader.Howeverhttp://www.usfestivals.com what is true for everyone and must be reiterated is that a signal provided by an indicatorhttp://www.usfestivals.com if also confirmed by an indicator of another categoryhttp://www.usfestivals.com will be much more reliable.
Having clarified thishttp://www.usfestivals.com let’s see the best known and used indicators of each categoryhttp://www.usfestivals.com remembering that some of them are hybridshttp://www.usfestivals.com so we find them simultaneously in several categories.
