What indicators are
Indicators are used for identifying or even creating patterns in the chaos of the currency market. They indicate market data in order to create or define trading scenarios. Therefore, the indicators do not forecast future situation. They put price data in order so that possible opportunities for profitable trading may be defined.
No indicator is correct or wrong in regard to the signals it produces. To achieve a desired result, any indicator should be used alongside an appropriate money management strategy. There are various indicators and it is quite easy to find a needed one for the assessement of the market, especially if you have basic knowledge. In this case it is clear what an indicator reflects. Different patterns lead to different techniques that can be applied most effectively as a part of a trading strategy.
4 Major types of Forex indicators
Examples of strength indicators: Relative Strength Index (RSI), Stochastic Oscillator, Commodity Channel Index (CCI).
Examples of trend indicators: SAR, Moving Average, True Trendline Indicator.
Examples of volatility indicators: Average True Range, Bollinger Bands, Envelopes indicators.
Examples of volume indicators: Money Flow Index, On Balance Volume, Demand Index.