Or, more exactly, they bring various details of previous price action forward to compare to current action.
But, Indicator hay days come and go. So, none of them "work," but, you can work with anything or nothing.
I'm beginning to see that institutional money is what drives Forex more than stocks. So many stocks and the big guys don't bother with most of it. But, the Majors run the world economy. All Tier One banks are big movers of currency.
So, on indicators, find 2 or 3 that can show what you want to see, I guess. I've conducted many personal trials. But, what do you want to see? That's what will work, over time. Your skill at noticing what any indicator tells you about profit is but one road to success.
Yes, and that's the smallest part in my mind. Indicators can really fool us in subtle ways. We start to believe the cool lines and not the price action. Sometime it's good to turn it all off. Practice seeing what you thought you saw with the help of the various indicators. You have to at least know what the indicators are indicating. What that means for profit is an art form, however. My main enemy is ME. Ego. Second guessing, fear, uncertainty and doubt.
I have to accept that it is mostly random. And we are still dealing with Chance, Odds, Probability, etc. The best anyone can do, EAs or Gurus, is to say, "Odds are." and still cover with Stop Loss and Take Profit on every trade.
The best indicator in my opinion is the 'price action'.May be your favourite indicator (MACD,Stochastic,RSI) works very well for you but trust me that happens because you have developed your psychi according to it's movement,you are satisfied with your indicator and you are happy with it's performance.Those factors play an important in determining your indicator's performance.Of course it happens that many traders (even he can be a close friend of yours) hates your beloved indicator.The truth is that market never follow your indicator.
The indicator gives u a set of rules to follow and thus leading to the emotionless trading which is really good for any forex trader.That's the one side.
The positive side is that if you stick to your rules (indicator,system) etc than in the long term you will be profitable.David Aronson in his book "Evidence based technical analysis" determines that what the technical analysis really is?What is the part of indicators is the trading?He clearly shows that when different indicator like stochastic and moving average etc were applied to the historical charts of Dow jones,S&P 500 the results were really profitable.
So how much experienced trader you are,it's good to have 1,2 indicators to help confirming you the price future action.After all,it boosts up your confidence about your trade.