A large majority of individuals who choose to make money in global Forex trading, quickly learn of the advantages of technical analysis. They come to understand that without some type of review of the market, they would just be performing emotional analysis.

And when studying the intricacies of technical analysis, they come across a word that will forever follow them in their Forex careers: “indicators.” These are used to predict price movements. They’re usually based on computations of volume and price. You can find them on your platform, at the top of a chart or in a special window to the side of your screen.

There are several groups of indicators, and when you choose the ones that you like best, it’s important that you pick a number of them rather than just one. This will optimize the analysis you perform.

Indicators are classified into five groups: those which help you to gage the trend, to assess currency volatility, momentum, volatility of the market and to know whether the Forex is oversold or overbought.

Your best approach is to select two or three; however, make sure to pick from each group not just from one.

Many experts recommend that you back-test the indicators you select to gage the results they’ve rendered historically. Keep in mind though that while past history is not an absolute indication of how an indicator will perform in the future, it can give you a better picture of the way it behaves under different conditions.