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Your forex knowledge should have been more developed in few previous lessons. Now you are able to use the platform, reading charts, calculating Resistance-Support, and also Overbought-Oversold. Your trading may even started showing some profit.Ok, but it is not enough. Those who consider theirself already advanced, and only decided to stop learning will only fall in the hole of failure and exactly same as those who never learn anything. Loss. Of course we don't want it, right? So let's just continue the next lesson of our technical analysis.
In technical analysis we know that some instruments which are used to predict price movement's trend, support-resistance, and overbought-oversold. Instruments are based on historical data that occurred in the past. Namely: Indicator.
Indicator was created by many technical analysts, and each of them has a particular purpose. Some experts created them to predict current trend that's in progress. Others created technical indicators to measure the OB and OS. Meanwhile, some of them also created indicators to determine the limits of support and resistance.
Many of technical indicators' name also has the same name as its inventor. For example indicator called Bollinger Bands, created by John Bollinger.
In fact, those indicator are applying scientific principles of statistical calculations. Yes, statistics. But don't worry, if you don't like the statistics (just like me), the good news, you do not need to do the calculation manually to create the indicator. All forex charts software providers usually have already provided a built in indicator that'll automatically do all the statistical calculations inside the box and we just only use it. In fact, there are few platforms that allows us to create our own indicators. Yes, of course, that if you are already advanced.
There are more than 300 indicators that you can use in technical analysis. However, practically you only need 2 to 4 types of indicators. It doesn't mean that more indicators being used, the better you'll be. No. There'll only be more confusion. Use only indicators needed and start with a few indicators that you think suitable. You can check indicators available in Netdania(available in menu studies): http://www.netdania.com/Products/live-streaming-currency-exchange-rates/real-time-forex-charts/FinanceChart.aspx
You need to know that many indicators used does not guarantee that your trading will earn profit. Essence of using the indicator is on how you integrate the indicators with other indicators, and also the timing or period that you use. The indicator has the role as advisor for your trading policy. You decide whether following the advice or not. The more indicators, the more advise given. Sometimes it becomes not only takes time, but also create misleading information and often playing our emotions.
See, that is why you need to know and choose the best indicator suitable of your own. Next, we'll continue our lesson on the first indicator that our Moving Average: The Mother of Indicators
