1. PIVOT POINTS:
These are basically points of reference and they are used by all professional traders in the market.They are used to identify important levels of support and resistance.simply put it is a point at which the price is expected to basically change its direction.The pivot point originated from the floor in chigago in the usa and is made available to off floor traders like you and me to use in trading.The pivot point consist of the R2,R1,PP,S1,S2
Method of use:
Never buy above the pivot point and never sell below the pivot point
(as in general guide line or rule)
BUY SIGNAL
when support or resistance is breached upward
SELL SIGNAL
when support or resistance is breached going down.
Note:This indicator should not be used in isolation.
2.MOMENTUM:
This is an indicator /oscillator that measures the rate of change in the price of the currency.It calculates the difference between todays closing price with that of ten days ago and plots the results around a zero line.
Method of use:
BUY SIGNAL
When the indicator reaches the bottom of a downward curve and begins to grow.
SELL SIGNAL
When the indicator touches the top of an upward curve and begins to point down.
3.MOVING AVERAGES:
Moving averages are basically used to define the trend of a currency whether it is an uptrend or a downtrend.There are four types of moving averages 1.simple MA,2.exponential MA,3.smoothed MA,4.weighted MA.They all differ only in terms of the weight coeficiency that was calculated to the latest data.
Method of use:
BUY SIGNAL
when the price (candle stick)rises above the MA.
SELL SIGNAL
when the price is (candle stick )fall below the MA
MOVING AVERAGE CONVERGENCE AND DIVERGENCE(MACD):
This is an indicator that follow the trend of the market.It is made up of 12 period exponential MA,and 26 period exponential MA and a bar chart.
Method of use:
BUY SIGNAL
when macd crosses the signal line upward
SELL SIGNAL
When macd crosses the signal line down it is a signal to sell.
NOTE:it is advisable to wait for a confirmed crossover before taking action.
5.RELATIVE STRENGTH INDEX(RSI):
It is a price following oscillator that ranges between 00 and 100.It is used to know when the market is overbought ie reading from 70-100 and when it is oversold ie readings below 30-00.
Method of use:
BUY SIGNAL
Reading of 30-00
SELL SIGNAL
Readings of 70-100
The idea here is to develop a trading strategy and style that of course you must stick to and be disciplined about it to really succeed in forex trading which i must tell you can be highly lucrative.
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