What Are The Necessary Indicators In FOREX Trading?
Trading in FOREX means that you need to have some education about how this rather complex system works. Although similar to the stock market, yet it is different enough that you should be sure to know what you are doing before you start making any trades. This requires that you know what the market indicators are and develop your own system - as well as testing it before you get real money involved. Here are some things you need to know first about FOREX indicators.
Fundamental Versus Technical Trading
Everyone that deals in FOREX will either rely on the fundamental method or the technical method of forecasting the fluctuations in the currency market. Some use a little bit of a combination, but will usually rely more on the methods of one or the other.
The fundamental method requires that you be a news hound and keep a constant eye on what is happening in the world. Political, economic events, and corporate reports could very well indicate that an economic change is in the winds and about to occur with some national currency that is on the FX market. 
The technical method, however, relies on information that is placed on charts. It indicates the recent history in what is occurring in the economy of a particular nation. By knowing what has happened in the past, many believe that from the charts alone that you can interpret what is about to happen with currencies on the FOREX market.
Different charts are posted at the different FOREX Web sites, meaning that one Web site, or software, may provide you with more information than another one. At the present time, more people do use the technical method than use the fundamental one, though successful traders can be found using either method.
Indicators To Look For
If you use the fundamental approach there are some key factors that you will regularly watch - at least if you are looking to do some trading. Here are some things you may be watching:
• Political Factors - Major changes occurring within a nation politically will usually bring about economic changes, as well.
• Economic Factors - This could include things like inflation levels, trends in trade levels, economic growth, and other things.
• Market Factors - Problems within a nation can effect that currency for some time. It may cause other investors to dump that currency and trade elsewhere.
The technical approach, however, uses a combination of factors in its charting. These factors together produce the charts that are used. Learning how to recognize from the charts when a fluctuation is about to occur pretty well sums up the technical approach. Some FX traders, however, will also watch at least some of the factors involved in the fundamental approach to give them an idea when a larger fluctuation is about to occur.
A New Approach
A third method for being able to forecast the market fluctuations in FOREX is called the algorithmic method. In just the past couple of years there has been a rise to about 33% of all trades being made using this method. It is predicted that it will be involved in more than 50% of all FOREX trades by 2010. It is also known as black box, or algo trading. It uses electronics to use information and trends as soon as it becomes available - even before humans can see it.
