Forex trading indicators that new traders should know

Standard indicators or metrics are used to analyze market sentiment and predict behavior, and Forex trading indicators are no different. These can indicate a potential price reversal, strength of price trends, and much more.

These Forex trading indicators are illustrated in trading charts, and most new players may not understand what these indicators represent. So, here are all the forex trading indicators you should know to make informed decisions.

Note: Forex investments involve significant risks. Do not take the opinions stated here as financial advice. Please do thorough research before making any investment.

Top Forex Trading Indicators

Moving averages

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

Average true range

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

Moving Average Convergence Divergence (MACD)

MACD compares two moving averages and notes the momentum in the market. When the moving averages get closer to each other, it means an increase in market momentum. On the other hand, when they diverge, it indicates a decrease in momentum.

Relative Strength Index (RSI)

The Relative Strength Index is represented by a number between 1 and 100. Any number around 30 indicates a support situation, and around 70 indicates resistance in the market. So, an RSI around 30 shows the potential for an upcoming rally, and a reading around 70 indicates a bearish rally.

Pivotal point

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

Parabolic SAR (Stop and Reverse)

The Parabolic SAR indicator helps identify market trends and potential opportunities for opportunities that may return. This forex trading indicator appears on the chart as an overlay of dots in a sequence in line with the direction of price movement.

Ichimoku cloud

This is a forex trading indicator that identifies resistance and support areas in the market. This indicator conveys a wide range of information, such as trigger lines, entry/exit points, and potential resistance/support areas.