Forex trading indicators

 

The forex trading indicators widget is a technical analysis tool that gives an overview of trading signals based on the most popular indicators: Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), Stochastic Oscillator (Stochastic), Average Directional Index (ADX), Commodity Channel Index (CCI), Aroon Oscillator (AROON), Alligator, and Parabolic Stop and Reverse (SAR). The widget translates the values of the indicators into three types of signals: "Buy", "Sell", and "Neutral".

The signals are available for various Forex market instruments, commodity, index, and stock CFDs, and bitcoin, for time frames ranging from five minutes to one month.

Forex indicators are used to help identify high probability trade entry and exit points. The existence of proven best Forex indicators implies the Forex market is not a random walk, as some economic theories contend. The Forex markets have a tendency to behave in certain ways under certain conditions. This behaviour repeats itself, meaning that certain price patterns will occur time and again. The best Forex indicators attempt to recognise such patterns as they form and to gain an edge by exploiting that knowledge.

MACD - Moving Average Convergence Divergence

MACD is an acronym for Moving Average Convergence Divergence. MACD can be pronounced as either "Mac-Dee" or "M-A-C-D."" The Moving Average Convergence Divergence oscillator is one of the simplest and most effective momentum indicators available. MACD is a trend-following momentum indicator that shows the relationship between two Moving Averages (MA) of prices. The MACD is calculated by subtracting the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA of the MACD, called the "signal line", is then plotted on top of the MACD, functioning as a trigger for buy and sell signals. MACD can be used to identify aspects of a security's overall trend. Most notably these aspects are momentum, as well as trend direction and duration.

RSI - Relative Strength Index

The Relative Strength Index (RSI) is a technical indicator used in the analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The RSI help traders determine when a currency is overbought or oversold, so a reversal is likely. Via media and analysis it is frequent to hear phrases such as "The stock is overbought" or "The stock is oversold." Often the speaker is referring to the stock's RSI reading.

Traditional interpretation and usage of the RSI is that RSI values of 70 or above indicate that a security is becoming overbought or overvalued, and therefore may be primed for a trend reversal or corrective pullback in price. On the other side of RSI values, an RSI reading of 30 or below is commonly interpreted as indicating an oversold or undervalued condition that may signal a trend change or corrective price reversal to the upside. The default time frame for comparing up periods to down periods is 14, as in 14 trading days.

Stochastic

The stochastic oscillator is a momentum indicator comparing the closing price of a security to the range of its prices over a certain period of time. The general theory serving as the foundation for this indicator is that in a market trending upward, prices will close near the high, and in a market trending downward, prices close near the low. Bullish and bearish divergences in the Stochastic Oscillator can be used to foreshadow reversals. Traders can use this oscillator also to identify bull and bear set-ups to anticipate a future reversal. Because the Stochastic Oscillator is range bound, is also useful for identifying overbought and oversold levels.

The important role the stochastic oscillator can play in identifying overbought and oversold levels, because it is range bound. This range - from 0 to 100 - will remain constant, no matter how quickly or slowly a security advances or declines. Considering the most traditional settings for the oscillator, 20 is typically considered the oversold threshold and 80 is considered the overbought threshold. Readings above 80 indicate a security is trading near the top of its high-low range; readings below 20 indicate the security is trading near the bottom of its high-low range.

ADX - Average Directional Index

The Average Directional Index (ADX) is an indicator used in technical analysis as an objective value for the strength of a trend. ADX is non-directional, so it quantifies a trend's strength regardless of whether it is up or down. Analysis of ADX is a method of evaluating trends and can help traders choose the strongest trends.

Traders believe that the trend is your friend. As a result, there are numerous trading indicators that are meant to confirm a trend. Once the trend is identified, however, the challenge is determining the best time to enter and exit a trade. Traders start by using the ADX to determine if there is a trend. A strong trend is occurring when the ADX is over 25; likewise, there is no trend when the ADX falls below 20.

CCI - Commodity Channel Index

The Commodity Channel Index (CCI) is a versatile indicator that can be used to identify a new trend or warn of extreme conditions. The CCI is a very common tool for traders in identifying cyclical trends not only in commodities, but also equities and currencies. CCI is relatively high when prices are far above their average. CCI is relatively low when prices are far below their average. In this manner, CCI can be used to identify overbought and oversold levels.

The CCI is calculated as the difference between the typical price of a commodity and its simple moving average, divided by the mean absolute deviation of the typical price. The CCI, when used in conjunction with other oscillators, can be a valuable tool to identify potential peaks and valleys in the asset's price, and thus provide investors with reasonable evidence to estimate changes in the direction of price movement of the asset.

AROON

"Aroon" means "Dawn's Early Light" in Sanskrit. The Aroon indicator is a technical indicator that is used to identify when trends are likely to change direction. In essence, the indicator measures the time that it takes for the price to reach the highest and lowest points over a given timeframe as a percentage of total time. The indicator consists of the "Aroon up" line, which measures the strength of the uptrend, and the "Aroon down" line, which measures the strength of the downtrend.

The Aroon Up and the Aroon Down lines fluctuate between zero and 100, with values close to 100 indicating a strong trend and values near zero indicating a weak trend. The lower the Aroon Up, the weaker the uptrend and the stronger the downtrend, and vice versa. The main assumption underlying this indicator is that a stock's price will close at record highs in an uptrend, and record lows in a downtrend.

Alligator

The Alligator indicator consists of three lines, overlaid on a pricing chart, that represent the jaw, the teeth and the lips of an alligator, and was created to help the trader confirm the presence of a trend and its direction. The Alligator indicator can also help traders designate impulse and corrective wave formations, but the tool works best when combined with a momentum indicator.

The "traits" of the Alligator are numerous. If the three lines are entwined, then the Alligator's mouth is closed and he is said to be sleeping. As he sleeps, he gets hungrier by the minute, waiting for a breakout from his slumber when he will eat. When the trend takes shape, the Alligator wakes and starts eating. Once satiated, the Alligator closes his mouth once again and goes to sleep.

SAR - Parabolic Stop and Reverse

The parabolic SAR is a technical indicator that is used by many traders to determine the direction of an asset's momentum and the point in time when this momentum has a higher-than-normal probability of switching directions.The parabolic SAR is extremely valuable because it is one of the easiest methods available for strategically setting the position of a stop-loss order.

This indicator is extremely mechanical and will always assume that the trader is holding a long or short position. The ability for the parabolic SAR to respond to changing conditions removes all human emotion and allows the trader to be disciplined. Given the mechanical properties of the parabolic SAR, it is no surprise that it is a favorite among traders who develop their own strategies. In trading, it is better to have several indicators confirm a certain signal than to solely rely on one specific indicator, so most traders will choose to compliment the SAR trading signals by using other indicators such as stochastics, moving averages, candlestick patterns etc.