Does it cross your mind for once on how you can take advantage of technical indicators when trading? Simply speaking, technical trading is something that involves evaluating the charts and making decisions as per indicators and patterns. Such patterns come in shapes like candlesticks on chart and can provide valuable information on the potential trend of a price.
Major Indicators to be Aware of
Indicators are either overlays or additions on the chart that’s providing additional info using mathematical calculations on both volume and price. Apart from that, it tells you where the price would likely go, which is a critical factor when making trades; should you Call or Put? These indicators would give you the signals.
As a matter of fact, there are 4 major kinds of FOREX indicators used and these are:
Trend indicators would tell which direction the market moves in, especially if there’s a trend happening. Sometimes, these are referred to as oscillators as they have the tendency to move between low and high values similar to a wave. Trending indicators include Parabolic SAR, MACD or Moving Average Convergence Divergence as well as parts of Ichimoku Kinko Hyo.
Then there is the Momentum indicator.
With such, it can inform you on how strong a trend is and at the same time, tell you whether a reversal would occur.
These could be very useful in picking out price bottoms and tops. These indicators also include:
- RSI or Relative Strength Index
- ADX or Average Directional Index
- Ichimoku Kinko Hyo and;
As for Volume indicators, it is perfect if you wanted to know how volume changes overtime, how many bitcoin units are sold and bought. This is extremely useful whenever price changes and if the volume has given indication of how strong the movement is.
Under this indicator include Chaikin Money Flow, On-Balance Volume as well as Klinger Volume Oscillator.
Last but not the least is going to be the Volatility indicator. In the event that you want to know how much changed happened in a given period, then this is what you should opt for. Volatility is extremely important and without this, there is no way how traders can make money. The price needs to move for everyone to make money.
With this in mind, higher volatility is an indication that there’s faster change in pricing. It lets you know about the direction and range of prices.