Forex Trading Education - A Must Knowledge Every Forex Trader Needs

Most Forex retail traders will use some form of technical indicator in their trading careers. In this short article, I'm going to review 4 of the common types of technical indicators.

Trend Indicators

Trend indicators indicate the persistence of price movement in one direction over time. Trends can only occur in three directions: up, down or sideways. They are one of the most common indicators used by traders today. You may have heard the phrase "Trade with the trend", and that's how trend indicators are typically used.

The good thing about trend indicators is that they smooth out short-term price fluctuations (or "noise"), and enables a trader to focus on trading in the overall direction of where market prices are headed.

Volatility Indicators

Volatility is a general term used to describe the magnitude (or size) of market price fluctuations. Unlike trend indicators, volatility indicators don't take into account the directional movement of market prices: you can have highly volatile fluctuations no matter the direction of the trend.

Support/Resistance Indicators

Support and resistance indicators describe the price levels at which market price action tend to reverse. In an uptrend for example, prices may tend to reverse downward at resistance levels. The opposite is true for support levels.

Support and resistance occurs due to the dynamic interaction between buyers and sellers.

Momentum Indicators

Momentum is a general term that describes how quickly prices move over a given time period. In essence, momentum indicators measure the strength (or weakness) of a trend. Thus, momentum indicators are often used in conjunction with trend indicators.

Momentum is typically largest at the beginning of a trend, and grows weaker and weaker until the trend eventually reverses.

Learning to trade Forex is not difficult at all. In my experience, it takes the average person about 10 days to learn enough to begin trading.

However, it's a fact that almost 95% of all Forex traders fail to make any money!

One of the reasons, I believe, why so many retail traders lose money is because they buy into all the hype and unrealistic expectations that some unscrupulous Forex marketers want them to believe. This results in many traders not getting the right education and information in order to trade profitably.

The marketers want you to believe that there's a "hidden secret" to profitable Forex trading. They want you to believe that there are top-level "underground" traders out there that hold the "holy grail" of Forex trading... and that they're willing to sell it to you at a low price of under two hundred dollars.

Come on, who are they trying to kid? No one would possibly buy into this hogwash, would they?

Unfortunately, as much as common sense tells them this is probably too good to be true, thousands of people every month buy into these scam trading "systems". It's sad, but it's the truth.

In all honesty, there are no hidden secrets to successful Forex trading. Good trading involves logical, rational thinking coupled with hard work and discipline. That's pretty much all you'll need - not some super "black hat", mysterious "underground" trading system that will make you an instant millionaire.

But many people don't like to hear about this truth because it just doesn't sound sexy or exciting. They like to think that trading is like being in a casino - you just have to strike it rich once, and you'll be set for life! Yeah, right.