A Guide to Utilizing and Making Sense of Forex Indicators

Knowing just which way a currency is going to move in regards to its value at any given moment in time is going to be something that many trades are able to master. However, the Forex traders who make the highest valued profits are those who utilize a series of unique tools which are freely available to them.

Many of those tools are classed and known as Forex Indicators, and if you are about to start trading Forex for the very first time you will of course need to know just what Forex Indicators are available to you and how you can use them optimally.

With that in mind we have dedicated this Forex trading guide to enlightening you and introducing you to a range of different tools which you are able to utilize, and we would suggest you read through this guide whilst also additionally making use of many of our other informative trading guides too.

1. Commitment of Traders Reports

   The Commitment of Traders report or COT as it is known is a report that is released every single Friday and it is going to show you a set of data and figures on which you will be able to see the positions held by traders on a range of different currencies and commodities.

   This data is released by the Commodity Futures Trading Commission and will allow you to clearly see just what positions are currently held by traders up to the following Tuesday.

   You will find this one of the most valuable tools if you are the type of trader who is going to want to follow some of the major investors in the money markets. The size of their trades can be enormous and will allow you to see what market sectors and currencies those traders have the most faith in and which they think are likely to bear fruit on their invested funds.

2. Sentiment Indicators

   You will always find plenty of addition tools which you are going to be able to use to allow you to make a good judgement call on how other traders feel about any currency pairing. Another type of indicator is known as a Sentiment Indicator.

   This is going to be a report on which you will see displayed, as a percentage, the way in which a number of traders have placed trades on any given set of currency pairings. If for example the percentage is displayed as 70% then 70% of those traders have placed a long position on those currency pairings.

   Whist you may be interested in following the trades and placing identical ones to other traders, you should of course always keep your options open and make your own decisions as to the way you think any two currencies will move.

3. News Feeds

   Having access to some form of rolling news service is also going to enable you to make a decision on which way any currency will move, more so when you have access to some form of rolling business news service.

   Whist you could of course have a business news TV channel on in the background as you are placing your Forex trades, you are going to find that many Forex Brokers also have their own rolling news feeds displayed on their websites and also on their trading platforms.

   As those news stories are being updated in real time then you are going to be able to react instantly to any breaking news story that is going to affect the value of any countries currency.

4. Daily Economic Data Releases

   One final tool that you should always be making use of and be aware of to allow you to become something of a more experienced and hopefully much more profitable Forex trader is an Economic Calendar.

   The one main reason why the currency of any country of the world is going to move in one direction or another will be based on just how well a country is doing financially. Things which can and often will see a currency drop in value include customer confidence in that country if low, or if there is a high unemployment rate or consumer spending and factory output is down.

   With that in mind please spend some time taking a look at the section of the Traders Bible website that is dedicated to Economic Calendars, as by doing so you will find out on what days and what time each major developed country will release market sector specific information.