Being able to identify a trend trading for any assets is most traders’ goal since knowing the trend direction allows them getting substantial profits. There are several trend indicators which have been tested and selected as reliable not only to identify the trend condition but its direction and even the reversal signs in advance letting traders take market actions ahead of time.
Moving Average Convergence Divergence? (MACD)
This indicator is one of the most popular for its accuracy and the feature that it has a signal line which calls for market action, highlighting the recommendation to sell or buy the evaluated asset. The MACD indicator shows the momentum and market trend simultaneously, and all the data can be displayed in a graphical representation on a price chart. It makes the MACD indicator a fast delivery information system.
Relative Strength Index (RSI)
The RSI is a momentum oscillator, which assigns a numerical value to market condition for a particular asset. This value indicates the likelihood that the asset’s price will increase or decrease its price in the next periods. The RSI indicator is capable of identifying the overbought and oversold condition and the divergence signals anticipating the reversal points. RSI is in one of the oldest indicators, and it still current and favorited by the selection and recommendation of professional brokers.
What is the Average Directional Index (ADX)
The ADX is an excellent indicator which will identify a strong trend in the market; it can be used as a scanner to discard the assets that are not trending and focus only on those that are in trade trending. Like other indicators, ADX assigns a numerical value to the market, and it has a clear market action for the values it reports. The ADX is displayed on price charts in a graphical representation, and it depends only on the assets price, and asset’s price history making simple to use, and the results are reliable.
Trend trading requires being vigilant for any reversal sing, due to the fact the just before a trend change its direction the potential for increasing profits is the highest, for this reason, several indicators try to spot this points
Parabolic Stop and Reverse (Parabolic SAR)
The Parabolic SAR is an indicator used to identify the momentum when highest probability the market will experiment a price reversal or change the trend direction, for this feature the indicator was called stop and reverse. Parabolic SAR indicates the direction of the trend reversal pinpointing it the price will move upward or downward.
Simple Moving Average (SMA)
The SMA 14 uses the closing price average for any 14 periods to identify when a market trend will star for an asset or when a reversal of a trend will happen. The SMA 14 determines accurately a price trend and its direction as well as any reversal. This oscillator is very versatile adaptive. It changes in both direction very fast, updating the current market conditions and anticipating the future price tendency, this feature makes it ideal for short-term binary options.