Swing trading would be made much easier if there was an indicator which could indicate where and when markets were approaching turning points. These turning points make it possible for a trader to get in at the start and the end of market swings or runs. Knowing when markets were about to rally or retrace would make it easy to pick the perfect entry points for your trades. Do such indicators exist that can assist a trader in identifying in advance where these points in the market may be? Luckily, they do exist and when used properly they can make trading much easier. These indicators are known as momentum indicators.
Momentum indicators are leading indicators and can warn of possible future price movement before it actually happens. Put simply, these indicators offer a glimpse of what future price movement may be before it has actually occurred. This is exactly the kind of trading edge traders need to be successful in any market. Momentum indicators work on the basis of measuring a currency pair s level of momentum. As the speed of change in price begins to slow down, momentum indicators alert you to this change in speed or momentum and that a retracement of price may soon be approaching. These indicators make it possible for traders to get a feel of the health of the market and make decisions regarding how much longer the current move has until it runs out of steam. Momentum is essential to managing any trades you have by knowing in advance where price may go. There are many different kinds of momentum indicators, but there continues to be one that is used extensively by all kinds of traders around the world.
RSI is one of the most popular and widely used momentum indicators. This indicator is by no means new and has been around for many, many years. Perhaps this is why it is so popular, time has proven just how effective this indicator really is. The RSI (relative strength indicator) shows levels of a currency pair that are considered overbought or oversold. When the indicator is in these areas, a trader should be on the lookout for potential price retracement. If a market moves into these overbought and oversold areas, more often than not price will experience some kind of adjustment in the near future. Knowing that an adjustment of price may happen, traders can close trades out early and lock in profits before they are wiped away and lost forever in the retracement.
Are you sick and tired of always picking the worst possible times to enter the market? If you are looking for someway to know in advance where price may go, check out what momentum indicators can do for you. Understanding momentum in a market means you know in advance where possible areas of exhaustion or turning points may be. No other momentum indicator comes close to the popularity of the Relative Strength Indicator. The RSI may just be the indicator you have been looking for to gain an edge over the market.
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