Trend indicators

trend indicators

Determination of Forex trend's direction is the core task of a trader. And there is no universal solution for this task, because it is up to a trader to find the time frame on which trend is sound. Speaking more clear, you are to define what are you looking for: long-term trend for entrance with a widely set Stop Loss either a short trend for a drastic entrance with Take Profit and Stop Loss set within short frames. Whatever a trader's goal is, the instrument to reach is mainly represented by trend indicators.

Trend indicators determine direction of tendency and follow it. The best popularity among them is gained by Bollinger bands, Moving Average (MA), Momentum Indicator and ADX.


momentum indicator



Each indicator applies its own methods to interpret signals. For example, Moving Average is built on cross of price charts and takes cross of MA by price as Open signal in a certain direction.

As for ADX, it notifies about presence of trend which is crossed by the level 20, whereas direction is defined by it with the help of lines DI+ and DI-.

Moving Average is the simplest indicator from the above-mentioned instruments, at the same time it is rather profitable provided that your approach is accurate. Its sole disadvantage is delay which is caused by extended period of selection. But if you reduce periods, you risk to get many false signals, thus, many traders use the linkage of MA with small and big periods.

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