Best Trading Indicators Revealed
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(How to use them to your advantage?)
If you’ve ever been interested in trading in any way, you’ve heard of technical analysis. It is indeed one of the “easiest” approaches to trading.
However, it’s really only easy on the surface. It is sufficient to say that it’s an analytical method that can be learned by anyone.
Technical analysis is based on the graphical analysis of price movements, which allows the development of tools such as supports and resistances as well as the construction of technical indicators.
We will focus on this last point in today’s article — construction of technical indicators.
What are technical indicators?
Simply put, an indicator is a decision support tool based on price and sometimes volume.
You have probably all heard of the RSI or MACD, these are indicators built using prices. The MACD represents the difference between two moving averages and takes the visual form of two curves and sometimes a histogram as well.
The RSI is also based on prices and takes the form of a single curve oscillating between 0 and 100. This is a major difference because in the case of the MACD, there is no limit, neither high nor low.
How to use them?
In the case of the MACD, the classic use is to wait for a crossing of the largest average by the smallest and go long. The opposite is also true for going short.
For the RSI it is a little different. It is customary to go long when the price goes above the 20 level and to go short when the price goes below the 80 level.
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Which ones to use?
Beginner
The easiest indicators to use when you are a beginner are without a doubt the RSI and the MACD, whose functions are explained above.
We will also add the simplest indicator of all: the moving average. It’s a great way to get started in technical analysis to become familiar with averages.
Advanced
Now that you have mastered the simpler indicators, we can turn to volume analysis, which, in conjunction with price movements, will allow you to analyze the relevance of a movement such as a breakout of resistance/moving average.
If the price does not move in the same direction as the volume, we will tend to be suspicious of such a move.
Expert
Ok now you have mastered simple technical analysis and you have learned how to use the major oscillators with joint volume analysis.
It’s time to look at volatility indicators such as the ATR, but you can also take it a step further by creating your own indicators on Tradingview.
Conclusion
Besides generating additional income from trading, for seasoned or experienced traders, this craft can be highly thrilling and self-fulfilling. For one, the adrenaline rush derived from trading is just as addictive as post workout. Next, you will realise that there is very little difference between trading and golfing which is in actual fact, a game of overcoming the self.
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