When someone at the party mentions Forex, there is mostly someone else who says it’s all hype – or at least winces. Well, they may have their reasons. Popular among amateurs, Forex has seen many of them relying on luck. Another reason is that unlike, say, CFD Forex does not necessarily rely on long time tendencies. That’s another reason why some players take it for gambling.
But are there more reliable things to help you make correct forecasts? Yes, there are mathematical tools used as indicators. If you are just starting your Forex exploration, indicators are what you should learn first.
Gambling or Calculation?
Will euro cost more or fewer dollars tomorrow? What about GBP or CAD? Will they grow or not? And how will cryptocurrencies react? If you do not consider tendencies, Forex is nothing but gambling, with chances as high as on the roulette.
To help you analyze the activity on the currency market, Forex traders have developed special mathematical tools a.k.a. indicators. They derive from the way this or that cross (a pair of assets) will behave and how the market will react. Knowing this (with a bit of certainty) will help you trade profitably.
- Following Trends. This type of indication is the simplest and considered the most reliable, deriving the expected behavior of asset prices from their past changes. Moving Average is considered the most important indicator of this sort and the most popular, helping to make the most exact predictions.
- Trend Confirmation. These indicators are secondary, but they help you decide whether indicators following trends apply this time. If they show high reliability, you can trust your MA and its likes.
- Overbought/Oversold. This indicator shows you secondary effects that affect the market. With this type, you can select whether the price of a certain asset is to grow (then buy!) or to decline (then sell!)
- Profit-Taking Tools. Taking the right course with the right cross is just a part of it. Another part is when to take your profits, and this group of indicators is just about that.
Prediction as Applied Science
There is nothing certain in the world. Even when trends are clear and predictable, there are always landing spots for black swans. Still, these are extremely rare, and trends are calculable. That’s the reason why indicators exist at all.
Bright math minds have developed tools for Forex that generate indicators. Does it mean the market is completely seen through? No. It still takes some risk as an art; otherwise, algorithms would have taken over. They do make millions for their owners, but a human touch is winning when acting right.
Someone Gets Rich While Somebody’s Waiting
Okay, maybe, it’s not the day to enter Forex for you. But if you are a calculating type, and you feel lucky, why not try? Save this entry to return to it later. And share on social media or add comments to reassure your friends who may still think it’s all about bets. Logic is the key, and foreseeing is the victory.