As a trader, you have to know about the four
indicators in technical analysis. It is actually a mathematical formula which can be used to know the market condition.
Furthermore, it is also beneficial to help giving the buy or sell signal. In fact, nowadays there are hundred of indicators which are made by the people in the foreign exchange industry.
Each of them have the different characteristics and way of use. That is why; you should understand in how to apply them in your trading strategy, in order to get the profits.
4 Popular Indicators in Technical Analysis
Between the hundred options available today, there are four popular indicators related to the technical analysis that must be known. What are those? Here are the information.
1. Moving Average
Moving averages are one of the most accurate Aspects for the long-term . Technical analysis, so-called long-term investors are those who buy shares in the market.
The aim is to be held (holding period) for more than 8 months. With such a long history, it can actually be said, that Moving Averages are one of the oldest aspects in the science of this calculation.
It is because this thing has even been used long before the era of computerization and the emergence of modern era. The principal is to be close to the trend direction.
2. RSI or Relative Strength Index
One of this indicators in technical analysis was introduced by J Welles Wilder in 1978 through an article in Future Magazine as a method of measuring the relative strength of stock prices.
Therefore, RSI can help you determine the selling momentum and buying momentum. Because it is useful to determine momentum, RSI is not only used by the traders.
It is also used by the medium- and long-term investors. The benefits are that you can enter the market when the price is lowest and pull the profit when the price is too high .
3. Slow stochastic
Similar to RSI, stochastic is an oscillator parameter that helps you determine the momentum of buying and selling. The difference is, if the RSI curve uses 30/70, stochastic is more conventional at 20/80.
Another difference is that stochastic has two indicator lines: %K and %D. Simply put, %K measures the current price change rate while %D is the Moving Average of %K.
You should buy when %K cuts %D from bottom up and sell when momentum is reversed. To be more accurate, you can confirm it by looking at overbought and oversold areas.
If a bullish cross occurs in the oversold area, then that's the golden opportunity for you to grab the profit by selling it when a bearish cross occurs in the overbought area.
4. Moving Average Convergence Divergence
Among other indicators in technical analysis, MACD is often touted as a king because of its complexity in determining the profit odds. What is the definition and concept of this macd?
In principle, MACD reads the new trends when the MA line in a shorter period crosses the MA in a slower one. However, the trend is not only read by crossing the MA line, but also by using a histogram.
Learn Each of them Properly
To get a better result in trading, it is better to learn about the methods above properly. Don’t forget to complete this strategy by joining the best forex broker in the market.
Didimax forex broker is the great choice which is recommended. It comes with so many features such as the easy deposit, withdrawals, low capital, and responsive customer service.
It is also a legal company under the regulation of a legal institution as well. Join Didimax right now after you learn about these indicators in technical analysis.