Indicators are tools you add to your chart to measure trend, momentum and volatility — turning raw price into clearer signals. There are hundreds, but a few do most of the work. Here are the essential forex indicators, what they show, and how to use them without cluttering your chart.
What is a trading indicator?
An indicator is a calculation based on price (and sometimes volume) that is plotted on or below your chart. It helps you spot things the eye might miss — like whether momentum is fading or a trend is strengthening. The SCapitalFX app includes 8 built-in indicators.
1. Moving Averages (MA)
A moving average smooths price into a single flowing line, making the trend obvious. Common settings are the 50 and 200 period. Traders watch for price crossing the MA, or two MAs crossing (a “golden cross” up, “death cross” down), as trend signals.
2. RSI (Relative Strength Index)
RSI measures momentum on a 0–100 scale. Above 70 is often called “overbought” (a pullback may be due); below 30 is “oversold” (a bounce may be due). RSI is great for spotting when a move is stretched.
3. MACD (Moving Average Convergence Divergence)
MACD shows momentum and trend changes through two lines and a histogram. When the MACD line crosses above its signal line, momentum is turning up; a cross below suggests it is turning down.
4. Bollinger Bands
Bollinger Bands wrap price in an upper and lower band that widen and narrow with volatility. Price tagging the outer bands can signal stretched conditions, while a “squeeze” (narrow bands) often comes before a big move.
How to use indicators well
- Do not overload your chart. Two or three complementary indicators beat ten conflicting ones.
- Combine types — for example a trend tool (MA) with a momentum tool (RSI).
- Confirm with price. Indicators support your reading of price action; they do not replace it.
- Indicators lag. They are based on past prices, so use them as guides, not crystal balls.
Risk warning: Indicators can produce false signals. No tool guarantees profit and you could lose your invested capital. Always use a stop-loss.
Frequently asked questions
What is the best indicator for beginners?
A moving average is the simplest place to start — it makes the trend clear at a glance. Add RSI once you are comfortable.
How many indicators should I use?
Two or three at most. Combining one trend indicator and one momentum indicator is a common, clean setup.
Do indicators predict the future?
No. They are calculated from past prices and lag the market, so treat them as probability guides, not guarantees.
Which indicators are on the SCapitalFX app?
The app includes 8 built-in indicators covering trend, momentum and volatility, across multiple timeframes.
Practise with indicators
Open a free demo and add indicators to live charts to see how they behave. New? Read forex for beginners first.