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Using Technical Indicators to Identify Reversals
Today's daily video is another change of pace. Technical indicators are deceptively simple to use. They can be very helpful when trying to identify new entry or exit opportunities but can be abused when they are too optimized or over-simplified. What you will learn: 1. Technical indicators can simplify price movements 2. Indicators can identify trend changes 3. Trend is important when timing trades with a technical indicator 4. Avoid “over-optimizing” indicators A technical indicator is applied to a chart and uses three pieces of information – time, price and volume. Because the forex is a distributed market, there is very little volume information. That leaves just price and time. There are a lot of ways to analyze that information and the potential variables are endless. Most technical indicators fall into two groups. The first is oscillators, which includes stochastics, MACD, CCI, RSI and many other popular indicators. The second type of indicators is based on moving averages and is usually overlaid directly on the price chart. There are hybrids and a few indicators that don’t fall into either category but they are rare and will be discussed in a later advanced course. For this section we will discuss oscillators... For the rest of the article and a video, click here: [url]http://www.pfxglobal.com/index.php?option=com_content&task=blogcategory&id=27&Itemid=164[/url]
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