In Forex Trading various indicators are utilized to aid the trader in making decisions. When you want to figure out how the prices are moving along in the market, you need to utilize momentum indicators. Momentum indicators are often referred to as “Oscillators,” as they swing or oscillate over and under the marker line on the histogram a lot like wave movements.
These indicators are computed through various formulae. Their relationship defined by the formulas are all predominantly based upon current prices in comparison with historical prices in a specific time period. These indicators indicate momentum based upon past values thus their predictive capabilities are low.
The indicators that indicate momentum are best suited for markets that are ranging. They are notorious for offering phony vibes during breakouts and trends specifically for short term trades involving short term graphs and charts. These indicators indicate the rate of change of price changes.
Some of the Momentum Indicators used for Forex Trading are as follows:
Accumulation Swing Index
Awesome Oscillator
Centre Gravity Oscillator
Chande Momentum Oscillator
Commodity Channel Index
DiNapoli Detrend, DPO
Dynamic Momentum Index
Gator Oscillator
Intraday Momentum Index
Linear Regression Slope
MACD
Momentum Indicator
Relative Strength Index
Schaff Trend Cycle
Stochastic Oscillator Fast
Stochastic Oscillator Slow
Stochastic Oscillator Full
Swing Index
TRIX
Ultimate Oscillator
Williams’ %R
Williams’ Accumulation/ Distribution
The most favourite indicators of FX traders include the Relative Strength Indicator A.K.A “RSI Oscillator.” Then the second is the Stochastic Oscillator which works on the principal of comparing current price values with historic prices over a selected time period and the third favourite of the FX traders is the Moving Average Convergence Divergence (MACD) oscillator which in principal is very different from other oscillators but the results it yields are similar in nature. The MACD works by presenting moving averages of price over a period of time.
