Forex trading indicators that new traders must know about 

Indicators or standard metrics are used to analyze the market sentiment and predict behavior, and forex trading indicators are no different. These can indicate potential price reversal, strength of the price trends, and a lot more.

These forex trade indicators are depicted in trading charts, and most new players may not understand what they indicators stand for. So here are all the forex trading indicators that you must know about to make informed decisions.

NOTE: Forex investments involve significant risk. Do not take the views mentioned here as financial advice. Please conduct thorough research before making any investment.

Top forex trading indicators

Moving averages

The moving average, or MA, predicts the direction that the current price trend is taking. It is most often the first technical indicator that traders start using. It is useful for identifying the strength of any forex trading trend and reversal that may happen in the future.

Average true range

This gives an indication of the volatility in the market. Using this figure, you can size your trade and mitigate your risks. If the value of average true range is high, the swings are likely to be wider, and if it is lower, then the larger position sizes are better.

Moving averages converge and divergence (MACD)

The MACD compares two moving averages and observes the momentum in the market. When the moving averages come close to each other, it implies an increase in market momentum. On the other hand, when they diverge, it indicates a decrease in momentum.

Relative strength index (RSI)

The RSI is represented by a number between 1 and 100. Any number around 30 implies a state of support, and around 70 indicates resistance in the market. So, an RSI around 30 shows a possibility of an upcoming rally, and a reading around 70 indicates a downwards rally.

The pivot point

This point gives an indicator of the demand and supply situation in the forex trading market. When the demand is high, the price moves above the pivot point and vice versa.

Parabolic SAR (stop and reverse)

The parabolic SAR helps identify the market trends and possible chances of opportunities that may come back. This forex trading indicator is depicted on the chart as an overlay in the form of dots in a sequence in line with the trend of the price action.

Ichimoku cloud

This is a forex trading indicator that defines the areas of resistance and support in the market. This one indicator conveys a whole lot of information, like trigger lines, entry/exit points, and potential resistance/support areas.

Edited by Abu Amjad Khan