‼️ What are Technical Indicators?

➡️ Technical indicators are mathematical tools that analyse one of the five following figures: open price, high, low, closing price and volume. As a result of the calculation, technical indicators are plotted graphically as chart patterns. Sometimes they overlay the price chart and sometimes they are drawn in a separate window. There are literally thousands of Forex technical indicators out there and, furthermore, anybody with coding skills can write their own, but keep in mind that there is only so much information that will actually be of use to you. Another thing to keep in mind is that the majority of technical indicators were developed long before the internet and were actually designed for the stock or commodities markets and for high timeframes - as 24 hours was about as often as trading charts were updated.

➡️ Technical indicators fall into four main categories: trend, momentum, volatility and volume. Some indicators get classed into two groups and are open to interpretation about what group they should belong to. For instance, some analysts suggest the MACD (Moving Average Convergence Divergence) is both a trend and momentum indicator and that the RSI (Relative Strength Index) is momentum and volatility.

1. Trend Indicators:
- Average Directional Movement Index (ADX)
- Moving Average Convergence/Divergence (MACD)
2. Momentum Indicators
- Relative Strength Index (RSI)
- Stochastic Oscillator
3. Volatility
- Average True Range (ATR)
- Bollinger Bands
4. Volume Indicators
- On-Balance Volume (OBV)

➡️ What Is the Best Forex Technical Indicator?

Choosing which is the best technical indicator is a subjective exercise. The technical indicators you choose will depend on many factors, including your style, method and overall strategy. Therefore, the best Forex indicator is the one (or combination) that works for you. If you are a swing trader looking to identify the start and finish of a swing or trend, then trend and momentum indicators could prove to be invaluable. In contrast, a scalper operating off a one-minute timeframe will have little use for either. Day traders are the ones who are most reliant on technical indicators. They are looking for opportunities that present during the hours when they can be at their platforms. Many day-traders will use combinations to generate signals, which may occur when economic calendar data and events are published or broadcast.