Simply put, a Forex indicator is any datum or calculated value that is used to mark a change or potential change in a Forex trade. Another term for Forex indicators is signals. There are a large number of potential Forex technical indicators that are used to predict the future value of a currency-pair. Some of the best Forex indicators are based on statistical analysis. Also, some of the best free Forex indicators do probably as well as any that you purchase.
Are Free Forex Indicators Reliable?
There are many theories as to what the most accurate and free Forex trading indicator might be. From time to time, there are new indicators that are claimed to be significantly better than all the others are. They are usually very insightful but may not be the best Forex indicator possible for all situations. Most come from complex mathematical formulas that involve statistics, and are usually a variation of simple, weighted or exponential moving averages.
Unless you are a statistical mathematician, you would be hard pressed to understand the dynamics behind many Forex indicators. Many indicator are the culmination of long years of study by experts. However, you are able to to apply them to price charts without understanding all the mathematics behind the indicators. The best Forex indicators are most often free Forex indicators. These are the formulas that have been used for a long time and are proven to be helpful for approximation future price trends. This does mean that they are perfect however, nothing is, and no indicator can absolutely predict what prices will do in the future.
What are Good Free Forex indicators Download Sites?
There are many free Forex indicators available, and many great websites to find free Forex indicators. One such site is the Forex-TSD.com trading forum. You can find many free indicators. Types of indicators available include:
- Stochastic Indicators
- Moving Averages
These statistical patterns in the history of a given currency-pair’s value are used to predict future value trends. The stochastic indicator is a theory based on the idea that when a price is rising, it will tend to close at or near its previous highs. Alternatively, if the price is falling it will tend to close at or near its previous lows.
The second type, the Moving Average, is used to remove potentially, confusing information in the form of small, frequent fluctuations in the price of a given currency-pair’s history. This Forex indicator allows traders to better predict the over-all average pattern of increase and decrease in the price.
Moving averages as a good price indicator is based on the theory that the daily fluctuations are separate from longer-term patterns and need to be tracked separately. Removing the smaller fluctuations allows the longer trend to be tracked. These are a form of free Forex indicator because they are not owned by anybody; they are based on mathematics and are freely available to all because mathematical formulas cannot be patented or owned.
There are at least three types of moving averages – simple moving average, weighted moving average, and exponential moving average. The simple moving average can be configured by the trader for a period of minutes, days, weeks or months. For example, you can say you want a 10-day simple moving average of prices on the EurUSD pair. The moving average line you will see on your price charts will just show the last 10-days of prices divided by 10 as the average. As a new day begins, that day’s prices are used as the current day and the 10th day drops off. This provides you a “moving” average of daily prices (or 15-minute prices, 30-minute moving averages, 1 Hour moving averages, etc.).
The weighted and exponential moving averages are similar, except more weight or importance is given to the more recent average price of the time frame you are using. This is due to the assumption that current prices are more reflective of the mood of traders than the older prices. These moving averages change more quickly than the simple moving average price line.
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