What are the best technical indicators in foreign exchange trading practice
Classification of technical indicators of foreign exchange trading
Technical indicators analysis indicators will show the leading or lagging data signals according to their main performance in a certain time range. Leading indicators are also called volatility indicators. They will show you the in and out data signal before confirming the event. Backward index is a typical indicator of development trend. They show you certain indicators after the occurrence of a malignant event, and show you the definite data signal of the development trend.
Leading indicators (volatility indicators)
Leading indicators can be successful, showing you the early data signal. In other words, you'll be able to get into the sales market before the potential volatility occurs. Remember that although you can get into the sales market at the beginning of a new trend, you will also encounter false promotion in the whole process.
As a result, investors often use a number of other leading indicators to try to eliminate these false increases. The two leading indicators widely used in foreign exchange investment are random index and relative high and low index (RSI).
Random index is one of the more familiar indicators. Its founder is Joe lane. In fact, random indexes are used to decide whether to overbought or oversold in the sales market. In other words, random indicators will remind you that you are overbought and the price will be adjusted. If the data signal shows that the information is oversold, then the random indicator will remind you that the currency is sold too much, and the price will jump back.
The random index is composed of two lines moving together and crossing at a certain point. In addition, this indicator has left and right high and low areas. The upper area is overbought and the lower area is oversold.
When the two channels enter the lower area, the random indicator will display the information oversold data signal. We can sell more than two types of currency in the region. If two into the above area, random indicators will display information overbought data signal. Then we can sell currency pairs in two down crossing locations that are beyond the overbought area. It's an arbitrary volatility indicator that gives us two basic data signals.
However, random indicators are also very effective in deviation trading. When you use random indicators to analyze technical indicators, you can see that if the indicators move up, the price will move down, and the price will move up. This is a bullish upward deviation. If there is an upward deviation between the price and the index, one can predict a rise. Bullish deviation is the same.
Relative high low index (RSI)
The relative high and low index is another feasible leading index. It is similar to any volatility indicator in that it shows evidence of overbought and oversold standards and their deviations. However, the relative high and low index is only a line into overbought and oversold areas.
When RSI enters the 70 reading value in the upper area, the information overbought data signal is displayed. When the RSI goes beyond the overbought area, people can be bearish. When the RSI goes below 30 readings in the area just below, people get oversold data signals. So we buy foreign exchange trading pairs in areas where the RSI is over sold.
RSI can also be seen in deviation indicators. Sometimes the bottom and top of the price will deviate from RSI, which is the deviation of bullish and upward. Upward deviation augurs potential upward movement, while bullish deviation augurs downward movement.
The backward index represents that the data signal appears after the occurrence of malignant events, and it is a definite indicator rather than a weather forecast. From this point, I can see that the advantage of the post index is that they give you less and less false signals than the leading indicators. On the other hand, their shortcomings depend on you being able to enter the sales market only after the trend has emerged. We have just started to analyze this indicator:
ADX (mean development trend index)
The average development trend index (ADX) is a technical index of change trend. It shows the obvious level and credibility of information development trend. It is not necessary to confuse it with the development trend. ADX is unable to display the development trend. It shows only a clear level of development trends. ADX is one of the best development trend indicators. The reason is that it accurately shows the scope of the development trend, and it is also easy to understand.
ADX is a graph that moves between 0 and 60.
Foreign exchange traders feel that ADX above 35-40 is a very strong data signal. It is when people want to enter the sales market. Conversely, ADX values of 20 and less than 30 are regarded as development trend indicators in the development trend. When the ADX value is less than 20, it generally represents the market index with no significant development trend. It is important to note that most of the spurious increases occur during this low consumption period. If the ADX value is less than 20, you do not need to enter. Unless you're doing business with a range of strategies.
Brining band is a technical index based on the price of volatile matter. It consists of the upper and lower zones and their moving average system. The upper and lower zones are the support line and pressure level. The moving average system is the cause of the change of position.
When the two are close to each other, it means that the currency pair is in a low volatile natural environment. When the two wireless antennas are just beginning to expand and separate, the money pair has experienced an increase in angular momentum and price evaporation.
Smooth moving average system of different points (MACD)
MACD is an indicator that selects the price of two moving average systems of two moving average systems, and then flattens them with the other two moving average systems. In addition to the two moving average systems, there is also a column chart showing the difference between the two moving average systems. You're going to think, there's a big relative lag behind MACD. In short, it is one of the most widely used technical indicators.
MACD basic data signal:
MACD cross drive up more
MACD cross down bearish
Bullish deviation - MACD moves down, price moves up
Upward deviation - MACD moves up, price moves down
Stop loss to actual operating point index (SAR)
The inventor of stop loss to actual operation point index is Panamanian wilder, who is also the creator of RSI index. They are the dots at the top and just below the candlelight chart. When the bar chart is close to rising, the small black dot is in the bar chart. As soon as the bar chart begins to slide, the small black dot moves to the top of the bar chart. Compared with other indicators, SAR is as reasonable as the data signal of entering and exiting. But many investors use it as an exit signal.
There is a SAR standard that can be adopted, that is, buy it at three points below the bar chart and sell it at three points above the bar chart.