Leading indicators are actively used by traders, who prefer to anticipate in advance when and what bets should be made. To such indicators adopted classified oscillators.
If we consider the essence of leading indicators, they in their total mass are taking into account the trends that can be observed in the graph, given the time constraints.
Each trader has his own worked strategy, which he often adheres to all the time if the profit from it is obvious. Targeting leading indicators is one type of strategy. Many traders only use them in their work. Although many stock market experts recommend combining strategies using different schemes depending on which currency or raw material is being traded.
Often such indicators are used in trading with currencies. The value of the indicators lies in the fact that with their help you can predict the rate in advance, buying the currency at the minimum value and selling at the maximum.
The Essence Of The Forecast
When making a forecast, using the leading indicators, primarily focuses on the chart. Price changes are estimated based on the specific time range and trend of the schedule.
Typically, you can see in the graph the time range between the time when resources should normally be repurposed and the time for resale. Often the trend has a kind of cyclicity and therefore for each resource it can be easily tracked using a long-term graphic image.
Oversold is the state of the price when it reaches its minimum and should not expect further decline. At this time just and should buy shares or resources. But when there is already overbought – then it is necessary to start selling the stock, as further price growth should not wait – only a recession.
Types Of Indicators
It is accepted to conditionally divide leading indicators into 2 main types:
- Standard. They are already provided by the platform system and are used in programmed format.
- Custom. They are developed by the users themselves (traders) and programmers for ease of work.
Secrets Of Use
The most common indicators are Parabolic Sar, OsMA, but Stochastic is recognized as the most convenient and successful – it is the most sensitive and the fastest shows the predicted transition of prices from one zone to another.
The key signals for traders are zones 20 and 80:
- When the line crosses the 20 bottom-up zone – this indicates that it is necessary to purchase the currency;
- If the line has crossed 80, you must start selling.
At the same time, some traders (especially beginners) prefer not to take risks and therefore work in the range of 30 and 70 – in this case profit can be obtained less, but also losses occur much less often and in less volume.
But it should be said immediately that only the indicator is not a full-fledged strategy of bidding – it is only part of a complex analytical system.