Trend indicators: working with delays or at current prices?
In the last ten years, trading tools have multiplied several times. The development of information technology has led to an increase in the number of different automatic strategies as well as indicators. Now the process of forecasting the movement of a financial asset boils down to the analysis of technical indicators.
Each trader uses various technical elements in the fix api trading. However, I can state with confidence that an absolute majority of managers uses trend indicators in their manual trade, which we will now discuss.
Trend indicators are a group of components of the technical analysis of assets that display the market stage: upward or downward. Also, the time when the quote is matched with the indicator indicates that there is a flat. These indicators allow traders to analyze the rejection of quotes from their values and thus to learn the trend force.
Popular trend Indicators:
– Moving Average;
All of these indicators are based on historical prices of the financial asset, but with different period and calculation method, so that different signals can be obtained.
For example, the Moving Average technical indicator (http://www.investopedia.com/terms/m/movingaverage.asp) displays the average value of a financial asset for a certain period of time. That is, the value of MA with parameter of 10 will display the average price for the 100 last bars. Thus, by trading at fixapiforex, you can determine how current quotations differ from the average of 100 periods. As you know, if the quotes are above the MA indicator, it is a signal to the ascending motion and therefore a signal for purchases. If the quotes below MA it’s the downward trend and the sale of the currency pair.
But it’s not as smooth as the picture is. I want to point out that the weakness of the indicator data is in their calculations. Trend indicators are based on historical values that do not guarantee the same momentum in the future. So I would use the indicator data to understand what phase the market is in relating to past data, and then compare it to the fundamental factors. This allows me to determine whether this value is confirmed by the external background or if the players themselves have “forced” the asset into the zone.
But at the same time, this group has one key advantage I mentioned earlier: almost every fix api trader uses the indicator data in the trade. The major players and market maker often use moving average with a period of 50, 100 or even 200 to define long-term positions. And, of course, when the quotes are appropriate for these levels, you can safely say that there is a possible spread because of the large number of transactions that approach the relevant zones.
Trend indicator pros:
- A large sampling period of calculation methods;
- The ability to compare the current market situation with past data;
- The view whether the trend is in relation to the current values.
Trend indicator cons:
- Due to a mathematical apparatus based on historical analysis, there is a “delay” between the current value and the signals of the indicator data;
- Reducing the number of samples increases the chances of getting false signals, and increasing the sample shows late results.
To summarize, the technical trend indicators are suitable as filters for the selection of open positions, and may also point to the exit areas of the transaction. Personally, I’m not taking them to the signal lights because they lag. There are other techniques for technical analysis that will show more accurate signals and without the use of trend indicators, such as the fix api arbitrage strategies: http://www.forexzzz.com/product/forex-zzz-lock-arbitrage. However, using indicator data in the fix api trader’s trade strategy is required, but only as a filter that confirms the signal.>