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.
Some investors gain profits by trading against the trend or for correction. However, following of the trend could appear as easier and more safe strategy. To identify a particular trend and to include in it is one of the most important strategic goals for investors. There is a saying – the trend is your friend.
To recognize the trend, however, is not an easy task. That is why, investors use indicators to define the trend.
The easiest way to do this is to use moving averages and to cross them to determine the trend.
Commonly used ones are 50 and 200-day moving averages. It is accepted that while the 50-day moving average is above the 200-day one, the trend is bullish and vice versa. A signal for a change in the trend movement is given by the intersection of two lines.
Of course, investors oriented towards short-term horizon and smaller motions can use shorter-term moving averages – for example, a combination of 10 and 30-day moving average.
Many investors use other varieties, such as periods of these moving averages, which according to them give a clear idea of the trend and its change.