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Indicators

Understanding Indicators: How to use them in your TradingLots of Traders shove indicators on their chart to try and paint a clearer picture of the market, but is it really helpful? Well, only if you understand their true purpose, which is to gauge the market temperature. In other words, how extreme price is and how good a deal you are getting. Think of it like the weather. Sometimes its really hot (above average) sometimes its really cold (below average). Your job as a Trader is to judge the Market similarly. In this video, I break it all down with my thoughts on the current GBPUSD market. Trade Small And Trade Safe.
by WillSebastian
How to Choose the Right Indicator?Many traders, especially when starting out find themselves in a constant search of the best trading strategy. A quick Google search is enough to scare anyone starting out, as the number of indicators and strategies to use under different market conditions is overwhelming. 🗒In this article, we will discuss *1* indicators nature and the correct way to use it, *2* how to choose the right indicator, and most importantly *3* how to know if the indicator is reliable or not. --------------------------------------------------------------------------------------------------------------------- 📌 First, what are indicators? Origin and Nature Indicators are statistical tools that digest price data, OHLC of each candle, add a formula to it, and then convert it into visual information such as graphs or oscillators. Indicators provide information about the strength of a trend, momentum, and possible reversals. When it comes to indicators, we can divide them into four classes: Momentum indicators, Trend indicators, Volatility indicators, Volume Indicators. Knowing which one belongs to which category can help you make much better trading decisions. On the other hand, combining indicators in a wrong way can lead to a lot of confusion, wrong price interpretation, and, subsequently, to wrong trading decisions. 📌 The correct way to use indicators. Indicators don’t provide signals. Most traders never look at the indicators they are using and even less have ever tried to understand the formula the indicator uses to analyze price. They then use their indicators in the wrong context and wonder why nothing works. 🗒Indicators don’t tell you when to buy or when to sell. They don’t even tell you when something is overbought or oversold. Indicators are great tools if a trader understands their true purpose. Indicators provide information about price, how the price has moved, how candles have shaped, and how recent price action compares to historical price action. Again, not a direct signal to buy or sell. Thus, the job of a trader is to interpret the information on their indicators in a meaningful way and turn it into a story about price action and buying/selling pressure. Who is in control right now? Is the market ranging or trending? Is price losing strength or gaining momentum? 📌 How to choose the right indicator? That suits your trading style and personality ----------------------------------------------------------------------------- 📕 * Meaningful: Represents important information. ----------------------------------------------------------------------------- Your indicator choice should match your trading style. The purpose of indicators/strategies is to offer a way to identify clues and to provide a framework for traders to work in. Our main job, as traders, is to collect clues and combine them in a meaningful way to have an edge over the market. 🗒 Only add indicators that help you put the odds in your favor. -- If it doesn’t, you don’t need it. ----------------------------------------------------------------------------------------------------------- 📕 * Objective: Has a clear operational definition of what is being measured. ----------------------------------------------------------------------------------------------------------- Indicators are ideal for rule-based trading as indicators take out the guesswork by providing information that is totally objective especially for newbies who are struggling with discipline. The most successful strategies/indicators are those where not a lot of individual interpretation is required. 🗒 Only use indicators that help you make objective decisions. -- If it doesn’t, you don’t need it. ----------------------------------------------------------------------------------- 📕 * Understandable: Easy to comprehend and interpret. ----------------------------------------------------------------------------------- Indicators are great tools especially for amateurs who do not know how to relate price data into meaningful relationships. Indicators' main purpose is to make your life easier, not more sophisticated. 🗒 Remember: K.I.S.S. Keep it simple stupid! -- If it is complicated, you don’t need it. 📕 Last but not least, less is more: The problem with indicator redundancy is that when a trader picks multiple indicators that show the same information, he/she ends up giving too much weight to the information provided by the indicators. 🗒 “All Strategies / Indicators are good; if managed properly.” ~ Richard Nasr --------------------------------------------------------------------------------------------------------------------- 📌 How to know if the indicator is reliable? Cheat Sheet Checklist 📕 * Does it repaint, disappear or recalculate? We have all been there. An indicator looking good /profitable on the chart, but perform horribly under live market conditions. Most indicators are designed to only show/keep winning signals. Do not, ever, include an indicator in your trading plan before testing it on a demo account. 🗒 Here is a simple step by step guide on how to test indicators: - Attach your indicator to any chart. - Keep your trading platform running for a while for the indicator to plot a couple of signals. - Take a screenshot of the chart. - Refresh by switching between the timeframes. - Compare your chart with the screenshot If the indicator’s signals /drawings change location or disappear, then it is a red flag. Such indicators are not reliable and shouldn’t be used in any way. 📕 * Does it lag? In general, indicators are lagging, but so is price action. An indicator can only analyze what has happened already. Just as a candlestick or chart pattern only includes past price data. Nothing to worry about so far, as we mentioned above, indicators only provide information and do not offer signals. However, some indicators are too lagging. This kind of indicators looks good on historical data but appear too late under live market conditions. 🗒 Pro Tip: Always take into consideration when, where, and how does the signal appear. 📕 * Is it TradingView friendly? 90% of custom indicators do not work on TradingView, because PineScript does not allow recalculation. Thus, the signal/drawing can’t be modified once it is generated by the indicator. Therefore, indicators that are available on TradingView stand out from the crowd, and they are considered more reliable. --------------------------------------------------------------------------------------------------------------------- 📌 In brief, indicators are very famous tools and used by millions of traders. However, often traders don’t really know what their indicators are doing or how to use them. Always be aware of the objectives of your trading style and what you are trying to accomplish with the indicators. Then, adjust accordingly. Once a trader can stop using indicators as signal-tools, he will be able to transform his trading to new heights. Happy trading! Always follow your trading plan regarding entry, risk management, and trade management. ~Rich
Education
by TheSignalyst
42
SP500 Was Clear, But Will We Find Support? The SP500 printed a clear lower high on the H4 that was marked by multiple tings. 1. Runner Bot - TOP Signal Printed 2. Main Indicator - Candle Color Rotation showing Bulls losing strength. 3. Automated Pivots - Resistance was printed with a Pivot Order Block that started at $4,114. Price failed to break through this or even challenge it. 4. RSI "X" Markers - Price Action failed to print any RSI Resistance. This Indicates momentum dieing and the trend switching over from bullish to bearish. Best of luck, happy trading and let us know if you have any questions!
SP:SPXShort
by RainbowRunner144
7
🔳TOP 7 INDICATORS TO USE🔳 ◻️MACD(Moving Average Convergence/Divergence) Traders use MACD to identify changes in the direction or strength of the asset’s price trend. MACD can seem complicated at first glance, because it relies on additional statistical concepts such as the exponential moving average (EMA). But fundamentally, MACD helps traders detect when the recent momentum in an asset’s price may signal a change in its underlying trend. This can help traders decide when to enter, add to, or exit a position.MACD is a lagging indicator. After all, all the data used in MACD is based on the historical price action of the asset. Because it is based on historical data, it must necessarily lag the price. However, some traders use MACD histograms to predict when a change in trend will occur. ◻️VWAP(Volume-Weighted Average Price) The volume-weighted average price (VWAP) is a measurement that shows the average price of a security, adjusted for its volume. It is calculated during a specific trading session by taking the total dollar value of trading in the security and dividing it by the volume of trades. The formula for calculating VWAP is cumulative typical price x volume divided by cumulative volume. VWAP gives traders a smoothed-out indication of a security’s price (adjusted for volume) over time. It is used by institutional traders to ensure that their trades do not move the price of the security they are trying to buy or sell too extremely. ◻️EMA(Exponential Moving Average) An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. An exponentially weighted moving average reacts more significantly to recent price changes than a simple moving average simple moving average (SMA), which applies an equal weight to all observations in the period. ◻️THE FOUR TYPES OF EMA: ▪️9-EMA is use for short term trading ▪️21-EMA is used for day trading ▪️50-EMA is used for analysis ▪️200-EMA is used for long term view ◻️RSI(Relative Strength Index) The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to evaluate overvalued or undervalued conditions in the price of that security. The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100.Generally, when the RSI indicator crosses 30 on the RSI chart, it is a bullish sign and when it crosses 70, it is a bearish sign. Put another way, one can interpret that RSI values of 70 or above indicate that a security is becoming overbought or overvalued. It may be primed for a trend reversal or corrective price pullback. An RSI reading of 30 or below indicates an oversold or undervalued condition. Overbought refers to a security that trades at a price level above its true (or intrinsic) value. That means that it's priced above where it should be, according to practitioners of either technical analysis or fundamental analysis. Traders who see indications that a security is overbought may expect a price correction or trend reversal. Therefore, they may sell the security. Thanks for reading bro, you are the best☺️ ✅Gimme a like and the Gods of Trading will favour you this week👍 Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
6
Why am I buying cryptocurrency right now?Hello Traders and Investors. I hope you are doing well. In this article I want to show you one cool idea. This idea refers to the long-term plan of the cryptocurrency market. On the chart you can see one of my additional indicators. This development allows me to determine the overbought and oversold levels of the cryptocurrency market. If green columns appear on the histogram, this indicates a strong overbought market and the best time to buy cryptocurrency. Conversely, if the columns are red, it is time to start reducing your risks and prepare for a strong correction or the beginning of a bear market. As you can see, the system has been talking about a strong oversold market for the last months. If you decide to buy cryptocurrency, this is a great opportunity (not financial advice). But I personally have already started buying cryptocurrency and at the moment I am using one of the best strategies for this period - the DCA strategy. You can check for yourself how well the system worked in the past. You can say that now is a different time, there is a crisis in the world, etc., but it has always been like that, believe me, I remember very well the bottom of 2018, or the COVID drop of 2020. In such periods there was always a lot of bad news and fear on the market. This is normal. In addition, I analyze many other technical and fundamental indicators (SOPR, LTH & STH realized loss/profit, liquidations etc.) and they all say that the market is quite undervalued and oversold. And this is evidenced not only by the indicators of the cryptocurrency market but even by the indicators of the stock market. Friends, I will be very happy if you like this idea and subscribe to me. It will be the biggest gratitude for me and an incentive to make even more cool content for you. 💚💚💚
INDEX:BTCUSDLong
by Yaroslav_Krasko