Monday, January 12, 2009

Forex - Foundation of technical indicators simple moving average

If you are unfamiliar with technical indicators you might find it very different from one another and plenty of them to learn. There are stochastic, exponential average, moving average convergence divergence, bollinger band, relative strength index (RSI), etc.

However not many realize that those indicators are made of the same thing which is the very simple moving average that we know. The only different is that there are made of different settings in their time frame parameters that why they look different. Take for example MACD is using 2 simple moving average line that convergence and divergence at certain movement. Secondly Bollinger Bands using 3 moving average lines which made up the bottom, middle, and the upper band. Likewise for stochastic, RSI, rate of change, williams R%, Average Directional Movement Index (ADX), etc.

All these look very different if you have not known about it. What set up apart from looking the same to one another is simply the parameter setting. If you adjust MACD and Slow stochastic is actually can be use interchangeably to one another.

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