Foreign Exchange South Africa: Types of Indicators

foreign exchange South Africa

It is natural for a trader trading on the foreign exchange in South Africa to not want to lose money and instead make profits. In fact, this is the reason why people enter the world of foreign exchange South Africa in the first place.

While there is no way that a forex trader can be certain to make profits with every trade on the foreign exchange market in South Africa, there is a level of certainty that can be achieved. This is done through a careful analysis of the trends existing in the market in terms of historical data on forex rates.

This is known as technical analysis. Typically, forex traders use various types of indicators to assess where the prices will head on the foreign exchange market in South Africa. Even though there are many indicators that you can use, they can be broadly categorised into five groups. Consider the following:

Volatility

These types of indicators are used by forex traders to find out the extent to which prices are fluctuating on the foreign exchange South Africa. These indicators can be used to figure out the general intensity of price fluctuations or even specifically finding out the direction these fluctuations are taking.

These indicators are crucial because they help traders figure out the current state of the forex market and customise their trading strategies accordingly. Therefore, it can be said that these indicators help traders assess the risks in the market. A good example of this type of indicator is Bollinger Bands.

Oscillators

Oscillators are used by more knowledgeable traders on the foreign exchange South Africa. They are ideal for traders with complex strategies because they are used for evaluating the speed of price movements in the market.

The rate of change of speed comes in handy for long term forex strategies because such strategies often need to be modified to cope with the current state of the market. Examples of these types of indicators can be seen on RSI and MACD charts.

Trends

As is obvious, these types of indicators are used for visualising the trend that the market is currently experiencing. This information is vital for most forex traders which is why these indicators are usually the first ones that they set up at the beginning of the day.

These indicators will show the market moving in three directions which include sideways, up, and down. Depending upon the direction visible, the forex trader will decide how to proceed with his trades on the foreign exchange South Africa. Moving Average is a typical example of this type of indicator.

Strength

Strength of faith that forex traders have in the market collectively can be seen with strength indicators. This is why an indicator of this type can also be seen as a number based rendition of the concept of sentimentality. Indicators of this type can be used to figure out trends that have not started yet.

Support and Resistance

Support and resistance indicators are supplementary indicators which can help in various ways. They can show entry and exit points or even help the trader decide where to place his stop loss and limit orders.

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