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Forex Indicators

In the Forex Indicators section we present to your attention a number of indicators, which may become indispensable tools of analysis and forecasting of price fluctuations. On this page you can find a brief description of each of our indicators, the calculating formula and information on the indicator’s practical use. All of the indicators, which are available on our website, can be downloaded and installed on the MetaTrader trading platform.

Forex indicators are the main tools of analysis movement in market prices. The indicators are very important but they are not the only link of the strategy that should lead you to success in the Forex market.

The best forex indicators are effective tools used for predicting rate, they allow you to choose the right moment to open and close positions.

The Rate of Change (ROC) indicator calculates how price has changed within a specified number of time periods by calculating the difference between the current bar's price and the price a selected number of bars ago. The difference is calculated in "Points" or as a "Percentage". The ROC moves in a wave-like fashion (similar to that of price), but it oscillates above and below an equilibrium level set at zero. The ROC rises as prices rise; the ROC declines as prices decline.

Developed by Doug Schaff in the 1990's, the Schaff Trend Cycle bases its method on the fact that trends, like price, exhibit repeating high and low patterns (cycles). This indicator is a modified MACD line run through a mofidied stochastic algorithm smoothed with Wilders' smoothing to calculate the final STC indicator.

Interpretation

The Schaff Trend Cycle uses three inputs:

The T3 Moving Average was described by Tim Tillson in the January, 1998 issue of 'Technical Analysis of Stocks & Commodities' article "Smoothing Techniques for More Accurate Signals". The T3is a significant improvement over traditional moving averages; it's smoother with much less lag. However, it can "overshoot" price as it attempts to re-align itself with current market prices.

Mass Index Indicator.Developed by Donald Dorsey and described in his article entitled “The Mass Index” in the June 1992 issue of Technical Analysis of Stocks & Commodities magazine, the Mass Index indicator was designed to warn of upcoming trend reversals. It does this by measuring the narrowing and widening of the average range between the high and low prices. As the price range widens the Mass Index increases and as the price range narrows the Mass Index decreases.

Developed by Gerald Appel, publisher of Systems & Forecasts, the Moving Average Convergence/Divergence (MACD) indicator is one of the simplest, most reliable, and most commonly used indicators available. The MACD is a momentum oscillator with some trend-following characteristics.

The Gann HiLo Activator was first introduced by Robert Krausz in the Feb. 1998 issue of Stocks & Commodities Magazine. Further information about this indicator was gathered from Robert Krausz's Fibonacci Trader Journal (Volume 1, Issue 2). The Gann HiLo Activator is basically a simple moving average of the previous 3 periods' highs or lows plotted based in relation to the HiLo Activator.

Interpretation

The Hull Moving Average (HMA), developed by Alan Hull, is an extremely fast and smooth moving average. In fact, the HMA almost eliminates lag altogether and manages to improve smoothing at the same time.

Interpretation

There are many uses. Basically, any method that requires a moving average would allow the user to experiment with using the HMA versus a simple or exponential moving average.

Kaufman's Adaptive Moving Average (KAMA). Developed by Perry Kaufman, this indicator is a moving average that automatically adjusts its speed based on market volatility.

Interpretation

The KAMA can be used in place of traditional moving averages.

Kaufman's Efficiency Ratio. Developed by Perry Kaufman and described in his book entitled “New Trading Systems and Methods”, the Efficiency Ratio is a measure of relative market speed to volatility. It is often used as a filter to help avoid “choppy” or flat markets and help identify smoother market trends.

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Trading spot currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. 

 

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