Read this article to know about the technical indicators that are used by traders. Thetechnicalindicatoruses the open, high, low and close price of the candle in the calculation. This is used in almost all the technical indicators that are applied in the technical analysis.
Technical indicators could be either leading or lagging.The leading indicators are those that lead the movement of price. These indicators give a signal before the new trend is formed or a reversal occurs. A lagging indicator is one that follows the action of the price. These give signals after the reversal has taken place.
The indicators are majorly divided into a trend, momentum volatility, and volume indicators.
These indicators, as the name suggests, tell the trader or the investor the direction of the trend of the security. The trend could either by bullish that is upward or bearish that is downwards. It could also have no trend where it is said to be sideways.
The Moving Average, Parabolic SAR, Forecast Oscillator and the Average Directional Index are examples of trend indicators. These are used by trades who use the indicators to analyze what the trend of the market or a particular security is.
The momentum measures the speed at which the price of the asset is moving. These kinds of traders look at securities that are moving very fast in a particular direction with high volumes.
The RSI, Commodity Channel Index, Stochastics, and the William%R are examples of momentum indicators that are used by traders.The momentum indicators are oscillating indicators and they help the traders to judge whether the asset is overbought or oversold.
Volatility is an important part of trading and there are many indicators to measure volatility. It is the rate at which the price moves wither up or down. The stock has a high volatility when the price moves at a very quick speed and if it is moving slowly then it has low volatility.
Bollinger Bands, Average True Range, Projection Oscillator and Envelopes are examples of volatility indicators used in technical trading.
Volume indicators are important to confirm the continuation of the direction of the security. There are many volume indicators and they let you know if the price movement is still strong. Examples of volume indicators used in technical trading are Money Flow Index, Chaikin Money Flow, Force Index, and Demand Index.
The technical indicators be used on all the markets and experts suggest that you use at least one of each type of indicator to confirm your trades.