UNDERSTANDING YOUR TECHNICAL INDICATORS PART 2

PARABOLIC SAR: Commonly referred to as Stop And Reverse indicates the buy and sell signals. When the Parabolic Sar lies above the Trend and Candlestick, this is a clear sell signal, but where it is below then that is a clear buy signal.

STOCHASTIC OSCILLATOR: The common use of this indicator is to indicate when the Market is either overbought or oversold. In most cases the 80 and above area is considered as the overbought zone, while the area around or below the 20 zone is generally considered as the oversold zone.

RELATIVE STRENGTH INDEX 'RSI': Is a great indicator, that measures the market activities just like the Stochastic. It also indicates whether a market is overbought or oversold. It gives an indication to the direction of the market. The higher the number, the more overbought the market is and the lower the number the more oversold the market is.

BOLLINGER BANDS: The common use of Bollinger Bands is to identify an overbought or oversold market. A price at or close to the upper band signals an overbought market, while a market price at or close to the lower band, signals an oversold market. Either way they are both signals that you should exit your current position

UNDERSTANDING YOUR TECHNICAL INDICATORS

Before proceeding, let me touch on the Japanese Candlestick.
CANDLESTICK TECHNICAL ANALYSIS CHART: Japanese Candlestick is a short term timing technique that generates signals based on the relationship between open; high; low and close prices. it is known to generate more trading opportunities than any known trading plan.
There are several indicators for trading the forex market, with over 800 expert advisor indicators, but using too many or wrong indicators is counterproductive, as the information that those indicators provide are quite misleading, hence I will limit you to learn Forex Trading with the best strategies and systems in the forex market. Therefore I will concern us with very few indicators. In the course of my series of post, I will touch some other good expert advisor indicators with signals and buyable indicators to improve your trading.
MOVING AVERAGES: Moving Averages are the most popular and easy to use technical indicators. They make it easier to spot the trend, which is very helpful in volatile markets. They are like foundation blocks for many other technical indicators.
There are three distinctive Moving Averages, Moving Average Convergence MACD;Simple Moving Average SMA and Exponential Moving Average EMA.
Moving Average Convergence 'MACD' as it's commonly called is an oscillator that is capable of measuring the market momemtum and equally follow the trend. MACD is designed to generate the buy and sell signals. A buy signal occurs when the MACD line crosses from below to above the signal line, while a sell signal occurs when the MACD line crosses from above to below the signal line.
SIMPLE MOVING AVERAGE: This is formed by computing the average price of a market over a period of time, the only problem is that it is lagging, it does not signal a change in trend on time.
EXPONENTIAL MOVING AVERAGE: EMA reduces the lagging in the Simple Moving Average SMA by applying more weight to recent prices. The shorter the EMA's period, the more weight that will be applied to the recent price. The most important thing is to have it in mind that EMA puts more weight on recent prices and this will make it react quicker to price changes on time than the Simple Moving Average

TYPE OF ORDERS

In forex trading market, there are different types Orders, I will only explain the three most important ones now-Market Order; Stop Order and Limit Order.

Market Order: This type of Order is used to either enter or exit the market at the quoted currency price of any given pair instantly.When you place such orders, you are simply saying you will buy or sell that given currency pair, at whatever price it reaches when I would be filled.

Limit Order: This type of Order is used to buy or sell a currency pair at a predetermined price. This Order is simply put in place to redeem your profit at that predetermined price, when you are not there to monitor your trade.

Stop Order: This type of Order is also used to buy or sell a currency pair at a predetermined price and it is the opposite of Limit Order because it is placed to stop your losses at the predetermined price, when you are not there to monitor your trade and cut your losses.

FORCES THAT DETERMINES MARKET MOVEMENT

There are two forces that moves market price. The TECHNICAL AND FUNDAMENTAL ANALYSIS.
With the Technical Analysis a trader studies the past movements to predict the future price of a currency pair. Therefore Technical Analysis reflects the behavior and pulse of the entire marketplace.
While the Fundamental Analysis are those things that make a country tick, the release of economic news like the social and the political happenings in a country. When Fundamental data is made public there are always reactions from investors and speculators because the release of these economic indicators "could" cause a currency to rise in price or "might" cause the currency price to fall. The words 'could' and 'might' indicated the double-entendre or better still the parisology of the Fundamental data.
Hence I will recommend the use of both the technical and fundamental indicators for a better forex trading.