The Key To Profiting With Currency Trading Signals

Forex trade signals refer to any number of different indicators that can be overlaid onto a forex pricing chart

. Placed onto this chart are the various indicators that analysts and traders work with in order to recognize signals that they can trade upon.

The normal candlestick chart chooses color to show the difference in positive and negative movements. The usual colors are green for a bullish movements and red for a bearish one. The main body of the candle stick denotes the starting price and the closing price and if the closing price is higher than the starting price then the candle body is green, denoting a gain, obviously a red candlestick denotes a loss in the period. The lines which are called shadows at both ends of the body denote the high and low values of the session. On the times that no shadow is showing it illustrates a session where the final price at the close was the highest or the lowest in the period measured by the candlestick obviously resultant on the color of the body. It is commonly accepted that there are over 20 distinct patterns that are typically used when working with candlestick charts. It would be a good idea to have a look at how these patterns form and what they signal.

This is really the first point for getting the information necessary to successfully predict trades. Additional indicators need to be used in conjunction with the chart patterns to get a clear view of direction.

Bollinger Band - Gives a proportional definition of a low and a high The price is high when it nears the upper band on the chart and it is low when it is near the lower band The nearer to either band raises the chance of a trader taking action and placing a trade. Depending on whether it is the upper or lower band will signal a buy or sell order. An alternative strategy is to buy if the price breaks above the upper band and sell when the price falls below the lower band. It is here that a trader must make the right decision from the signals shown for them to be successful.

An indicator which is also used extensively is the Relative Strength Index (RSI) This trading indicator highlights the current and historical strength or weakness of a currency pair based on the closing prices of completed trading periods. So a price will close lower in a bear market and finish higher in a bullish market.

Another important indicator is the Moving Average Convergence Divergence (MACD) This certain indicator looks at trends and clearly signals a reversal in trend when the MACD line passes zero on the chart or crosses the price line or if there is a divergence with the price line and the MACD line. So the MACD signals when the trend is changing and dependent on the direction of the MACD line, it also shows either a buy or sell order. Numerous other signals can be used and they use mostly on the distance between the MACD and signal line and the direction of movement.

Unless you purchase in a forex robot to analyze and calculate trades on your behalf you will need to get a full understanding of charts as well as the numerous signal indicators required to form a profitable trading strategy.

by: Dan Jones

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