Indicators and Oscillators

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Indicators and Oscillators

Thirty Seventh session of Forex Training

Welcome back to Forex professional training in financial markets.

In this session Indicators and Oscillators will be studied.

Indicators

Indicators are widely used in technical analysis by traders. Indicators are calculated by using market information in certain formulas.

This information can be derived from various sources, such as Open, Close, High and Low prices, in addition to transaction volumes.

Trader cannot predict the future movement and target price by only analysing trend on the chart, so he/she must exploit indicators as an instrument to see the future trend of a market.

Despite the widespread use of simple indicators such as Moving Average, some traders still prefer to exploit complicated Indicators like Stochastic.

Indicators may be applied in three different ways:

  1. Alert:  They warn traders about the desired or breakout point to place an order.
  2. Confirmation: They warn traders that a pattern or a trend is formed and the price is proceeding towards the target price.
  3. Prediction: They warn traders about a future pattern or a trend towards a certain price.

Indicators and Oscillators - Market Information in Formula - Forex Market Opening and Closing Price

It would be beneficial to use 2 or 3 indicators simultaneously, while using more than 5 indicators is fruitless.

Indicators can be classified into two types: Leading and Lagging indicators.

Leading indicators, such as RSI and CCI, can predict the future trend and a target.

Lagging indicators can be used on the current trend and they confirm the current direction, useful on powerful trends.

These indicators, like Moving Average, are ineffective on Range or Sideway markets.

Oscillators

Oscillators are indicators with fluctuating manner which are bound between 2 boundaries which will change as time passes.

They can be categorized into two types: Centred and Banded Oscillators.

Centred Oscillators, which waver on a certain level, can be used to determine the direction of a market trend.

Banded Oscillators fluctuate between Overbought and Oversold regions, such as RSI.

Indicators and Oscillators - Fluctuating Manner, bound Channel - Banded and Centered - Leading and Lagging

There are more than 18,000 indicators and oscillators.

Despite some predefined indicators available on MT4 platform, traders can still create customized indicators to develop better indicators for their trades.

There are some widespread indicators as follows:

They are all accessible on both the MT4 and MT5 platforms.

That concludes this session, until next time and another session take care.

Linkages & Notices

You can also view the video of this session available on the PFOREX Financial Video tutorials.

You can also find the video of this session on PFOREX YouTube Channel.

PFOREX Assist app provides BEST & FREE trading signals and market analysis. PFOREX Assist is available on App Store (iOS version) & Play Store (Android version).

The PDF file of this session is also available.


PFOREX Educational materials in text and video formats are developed by PFOREX Department of Education to enhance and improve investors’ knowledge and trading skills. Due to high risks and volatile fluctuations in financial markets, traders and investors must develop their trading skills and knowledge. It is strongly recommended to apply Risk and Capital Management when trading in financial market.

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