Forex 102Lesson 2

What are IndicatorsTechnical indicators formulate price data and display the results as overlays on price charts (i.e fancy lines, waves, arrows and other drawings). There are

countless indicators available when trading Forex, our website will share some

of the popular indicators and how you can use them in your Forex trading analysis.

Below is a screenshot of a 1 hour EURUSD price chart with some popular indicators...

Why use Indicators

Analyzing charts using price action is the foundation of chart analysis. Technical indicators

can be used to support and/or confirm your price

action analysis and can help identify potential price behavior that you may have missed. Technical

indicators can be used to spot price trends, ranges, market momentum and price reversals.

What types of Indicators are there

Leading indicators can signal potential market movement before it happens.

Lagging indicators signal a market movement that has already happened.

You may be thinking, 'I am only going to use leading indicators. This way I can get on every trend early and make lot's of

money'. The truth is, indicators are not that reliable. They

should be used as a confirmation of price action analysis or as part of a trading strategy - not as the strategy.

Do I need to use Indicators

No, Some technical analysts and traders focus on

price action only. It is purely a personal

preference whether to use indicators or not but we suggest that you at least learn the basics of indicator analysis before making-up your mind. Some traders believe that technical indicators can distract from price action.