What are technical Indicators and commonly used technical indicators

The Foreign exchange trading is a market where the currencies of different countries are traded. Traders, investors, individuals, corporate all purchase and sell the currencies and thus earn profits.

Although the Foreign exchange market is open 24 hours in a day and 5 days a week, and is closed only over the weekends, it is still not practically possible for you to sit in front of your desktop and keep a check whether a particular currency is in profit or running into a loss. Generally traders keep a check on the perfect moment for entering the market or look out for obvious signs which say Buy or sell. For anyone to trade successfully you need to use a variety of indicators which will help you analyze and understand the market trends. These indicators always come in handy as they can help you figure out the best time to buy or sell a currency. 

There are economic as well as technical indicators. The economic indicators relate to the political, socio economic, gross domestic product, Industrial production Retail sales, along with many other factors.

The technical indicators include a few mathematical calculations which are completely based on the indicators provided by volume as well as price. These values obtained are used for forecasting the probable changes in price. These days there are many technical indicators available in the market which can be used, and some of these have proved out to be very useful too. Let us have a look at some of the commonly used technical indicators.

Accumulation/Distribution Technical Indicator: This is a technical indicator which is largely determined by the changes which take place in the volume and price. The volume of the currency is a major factor which affects the price of the currency.  The higher the volume, the greater will be the price change, atleast for that particular period. Thus the higher coefficient will be the value of the indicator.  This technical indicator is another deviation of the On Balance volume technical indicator.  Both of these are used for confirming the changes in the price which is done by means of measuring the volume of the sales. The increase of the accumulation/distribution indicator results in buying of a security and while the drop in the indicator refers to the selling of the security.

The Trend-Following Tool: One can certainly make money by following a counter trend approach towards trading. Mostly what traders do is they tend to recognize the direction of the major trend and then try to make profits by trading in a similar manner. This is how the trend following tool comes into action. While this might not be a good process at all times, as many a time people misunderstand the purpose of the trend following tools and even separate these trading systems. It is recommended to use these tools on for long term or a short term period.