It’s hard to recognize positive trends in any market, and in the Forex market, entering or exiting too late could mean all of your funds. You don’t have to be the best of the best to make a profit, but you do need to enter at a low enough point and exit at a high enough point to make a profit. If you don’t recognize the right forex trading signals, you’ll end up getting buried and out of the game before you even get your feet wet.
In this forex training, we will cover the different trends that forex indicators follow. First, let’s start with crossover techniques that are specifically targeted and acknowledge the new trends that are developing. Some of the most popular use the MACD and moving averages.
As an example of moving averages, when the EMA (5) intersects the EMA (20), you have the intersection of a long-term trend with a short-term trend that shows a direction of profitability. You can use the same principles when looking at the MACD crossover. Over time, you will learn to spot these trends earlier and this will lead to more profit opportunities.
At this writing, a perfect example of this occurred. During today’s trading, the 4-hour chart of the GBP/USD pairing had the TRIX (15.9) moving dramatically higher. At one point, it was actually up 100 points. This is an excellent example of a great opportunity to make money in the forex market.
Two other popular trend-following forex indicators are the ADX and the Supertrend.
The Supertrend model was specifically developed to spot trends in the forex market and is extremely effective. That should be apparent from the name! The ADX is also very popular and has led to spot very profitable situations over the years. Noticing a crossover at level 17-23 (we used 20) is a great indication of the situation you’ll want to watch. Noting where it intersects on the DI- and DI+ line will allow you to determine if you should buy or exit if you are already involved in the trade.
Learning at least one trend indicator is a must, but learning several can only lead to good things. Like anything else, if you have more than one successful way to read a situation, you can look for a time when all of these forex signals converge to enter or exit your forex trade. If you have conflicting information, you know to stay away and wait for a better opportunity than risk your money.
