What is Forex Indicator?

Indicators are used for identifying or creating patterns from the irregularity of the currency market. In all cases, they receive the raw market data as the basic input and manipulate it in different ways to create actionable trading scenarios. The natural consequence of this description is that indicators are not tools for prediction. Instead, they are used to give order to the price data. No indicator is inherently right or wrong in terms of the signals it emits; however, each must be used with an appropriate money management strategy to achieve the desired results.

There are many different kinds of indicators. Every trader uses his or her favorites. Yet most traders will agree that there are three indicators that every currency trader must use.

• Moving Average Lines
• Bollinger Bands
• Average Directional Index (ADX)

Also, here are four different market indicators that most traders rely upon.

• Trend-Following Tool
• Trend-Confirmation tool
• Overbought/Oversold Tool
• Profit-Taking Tool