List of Effective Indicators Every Technical Trader Should Know

SMA, EMA, buy and sell: If you happen to know these terms, most likely, you’ve been either learning how to trade or doing trade. Trading has been going around for quite some time now and becoming even more popular for Generation Z and Millenial folks nowadays. If you’re into Forex Trading, Commodities trading, or even share trading, it would be useful to learn technical analysis and add it to your arsenal. 

Best Trading Indicator

If you’re planning to learn more about trading or even if you’re a veteran trader, you could still refer to this list as a guide with the indicators you should look out for when trading.

  1. Moving Average:  This trade is very important to understand, most especially to all the traders, because MA is an indication showing that buyers are controlling the price. Therefore, it represents the overall sentiment of the price, so that we should focus more on buying trades to monitor if the price is above the moving average.
  2. Relative Strength Index: RSI indicates whether the price is similar to reversal. If the price moves below 70 levels, it’s actually telling you about a bearish market reversal. And if the price moves below 30 levels in a downtrend, it indicates a bullish market reversal. It’s basically a measurement used by traders to assess the price momentum of a stock.
  3. MACD: Known as Moving Average Convergence Divergence. This indicator is made of a histogram and an exponential moving average. The main use of this indicator is to detect changes between two moving averages.
  4. Bollinger Bands: This indicator provides you a price range for typical asset trades. To reflect the current volatility, the width of the said bands either increases or decreases depending on the perceived volatility. If it’s narrower, the volatility is perceived to be little, but when the bands are wider, it’s perceived to be higher. It’s mainly used when a trader is trading outside of its normal environment.
  5. Fibonacci Retracement: Traders usually use this to pinpoint the degree to see which current market trend will move. If a market experiences a temporary dip – it’s called a pullback or retracement. Often if a trader thinks that the market is about to make a move, they use the Fibonacci retracement to verify this completely. It helps them to perceive possible levels of support and resistance. With this in mind, they can thoroughly decide whether apply stops or limits to trades.
  6. Ichimoku Cloud: It has the same function as other indicators; it identifies support and resistance. However, it also helps traders to get possible price momentum and provides the signals to help with decision-making. To simplify things, it helps identify market trends, gives support and resistance levels, and can forecast future levels.
  7. Standard Elevation: If you’re looking for something to measure the size of the price move, then SD is the one for you. It also helps the trader to see the possibility of the volatility affecting future prices. However, it cannot perceive the movement elevation of the price, only if it will be affected by the volatility.
  8. Average Directional Index: This indicator illustrates how strong the price trend will be. On a scale of 0 to 100, if it reads more than 25, relatively, it’s already perceived as a strong trend. Any number below 25 is what they consider a drift. This indicator is based on a moving average of the price ranging at least 14 days. But it still depends on the trader’s frequency.
  9. Stochastic Oscillator: It is an indicator in which compares the specific closing price of an asset to a possibility of prices over time. This allows them to see the momentum and trend strength. It does also use a scale of 0 to 100, and any reading lower than 20 practically shows you that the market is oversold. On the other hand, any reading above 80 is an overbought market.

Trade with Complete Knowledge

As they say, if you start trading without any proper knowledge, it is a gamble. But with the right tools and information, it’s more likely that you’ll succeed. Trading is no joke, and it takes time before anyone can get the proper hang of it, so keep on researching and learn from experienced people as well.