Technical indicators come in 2 formats:
1. Trend indicators - Trend indicators are traditionally not interested in reversals. They simply focus on the current trend taking place thus enabling traders to enter and 'ride the trend'. Some consider this the safest way of trading Forex and the reason why is because 'everyone else is doing it'. There are many trend indicators to choose from but we are going to focus on the main indicators that are used by the world's most professional traders.
2. Oscillators - These are opposite to the above. They are mainly used to trade reversals by measuring where trends become weak and start running out of steam. Once this occurs a new trend is most likely to start and this is where oscillators can help us again by showing us the new strength found in the new trend.
This is where Forex indicators can be crucial and can assist us in finding the correct point to enter and exit the market. However, they are never the primary signal for entry. Prices are always the primary signal. Forex technical indicators are more of a 'confirmation' that we are are doing is correct. Another thing to bear in mind is that with time; trend indicators and oscillators have crossed over. This means that we can now use trend indicators to help us with reversals and oscillators to help us with trends. We discuss this notion in our video tutorials and show you how each indicator and oscillator needs to be utilised.
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