The mathematical trading methods provide an objective view of price activity. It helps you to build up a view on price direction and timing, reduce fear and avoid overtrading. Furthermore, these methods tend to provide signals of price movements prior to their occurring in the market.
The tools used by the mathematical trading methods are moving averages and oscillators. (Oscillators are trading tools that offer indications of when a currency is overbought or oversold). Though there are countless mathematical indicators, here we will cover only the most important ones.
- Simple and Exponential Moving Average (SMA – EMA)
- Moving Average Convergence-Divergence (MACD)
- Bollinger Bands
- The Parabolic System, Stop-and-Reverse (SAR)
- RSI (Relative Strength Index)