In the next section of our Forex Trading PDF, we examine some of the key technical indicators and market insights used by experienced traders.

Donchian Channels

First invented by Richard Donchian, Donchian channels can be customized to your liking in terms of parameters. For example, if you want to display a 30-day breakdown, the indicator is created by using the lowest low and the highest high of that period (so 30 periods in this example).

If you are watching the moving average on a Donchian channel, you can look at averages from 25 days to the last 300 days. The direction that is allowed is determined by the direction of the short-term moving average.

With this in mind, consider opening one of the following two positions:

•     Long - If tThe last 300-day moving average is lower than the 25-day moving average.
•     Short - If tThe last moving average of 300 days is greater than the moving average of 25 days.

You must sell your pair to exit your trade if you open a long position (and vice versa).

Simple moving average

This is another commonly used forex indicator  by traders in Exness login global. The simple moving average (also known as the SMA) works slower than the current market price (called a lag indicator). In addition, it uses a lot of historical price data. In fact, more than most other strategies.

A good indication that the latest price is higher than the older price is when the long-term moving average is below the short-term moving average. This could be considered a buy signal due to an uptrend in the market.

In the opposite scenario, where the long-term moving average is higher than the short-term moving average, this obviously indicates a sell signal due to a downtrend. Moving averages are usually used as evidence of an overall trend and not as pure forex trading signals.

This means that you can mix both strategies to avoid breakout signals that do not match the overall trend suggested by the moving averages. This is, of course, a great way to make your breakout signals much more productive. When you are alerted to a sell signal, it means that the short-term moving average is below that of the long-term moving average. Therefore, you may want to place a sell order. However, when you are alerted to a buy signal, it usually means that the short-term moving average is higher than the long-term moving average.

Breakout

With breaks as trading signals, the breakout is considered a long-term strategy. Generally referred to as "consolidation", markets sometimes alternate between resistance and support bands. The breakout itself occurs when the market moves above these consolidation levels - whether they are lower or higher. Therefore, a breakout must occur when a new trend occurs.

If you look at the breaks, you have a good indication of whether or not a new trend has begun. However, this does not mean that a breakout is 100% accurate to signal a new trend. In this case, you may want to use a stop loss order to have a better chance of avoiding a significant loss.