Indicators play a crucial role in Forex trading by helping traders analyse market trends, identify entry and exit points, and manage risk. They are mathematical calculations based on price, volume, or open interest, providing insights into market behaviour.

Trend Identification – Indicators like Moving Averages (MA) and the Average Directional Index (ADX) help traders determine the market’s direction (uptrend, downtrend, or sideways).

Momentum Measurement – Oscillators such as the Relative Strength Index (RSI) and Stochastic indicate overbought or oversold conditions, helping traders predict potential reversals.

Volatility Assessment – Indicators like Bollinger Bands and the Average True Range (ATR) measure price volatility, assisting traders in adjusting their strategies accordingly.

Entry & Exit Signals – Tools like the Moving Average Convergence Divergence (MACD) and Parabolic SAR generate buy/sell signals, improving timing in trades.

Risk Management – Indicators help set stop-loss and take-profit levels by identifying support/resistance zones, reducing potential losses.

By combining multiple indicators, traders can enhance accuracy and make informed decisions. However, over-reliance on indicators without considering price action can lead to false signals. Thus, a balanced approach is essential for successful Forex trading.