Most forex traders make every endeavor to search for the perfect moment of entering the position. This may seem exciting, but the result in a long term is mainly negative. The truth is that there is no right way for profitable trading on the financial markets. Successful traders often rely on a set of indicators to help them in the proper timing on the market. Here are some of the most commonly used indicators.
Indicators that confirm the trend
The trend indicators are relatively good at determining the trend, but they are not completely accurate in terms of time, because they lag to some extent with giving signals for a change in the trend. Therefore investors often use indicators to confirm the accuracy of the trend.
These indicators may or may not be used as signals for buy or sale of a particular currency. They are rather used to see whether they are in line with the trend-defining signals.
A higher level of accuracy for the trend direction is assumed to be present when both indices show the same thing.
One of the most commonly used indicators for confirming the trend is MACD.
This indicator measures the difference between two exponential smoothed averages. This difference disappears and compares with its own average. When the current smoothed average is above its own average, the uptrend is confirmed and vice versa.
Of course, there are other trend-confirming indicators that can be used together with the MACD, for example the ROC indicator.