The One best thing you need to master in order to become an amazing trader in stock market is price action and the second-best thing that you need to master is technical indicators. In today’s world if start we looking into traders, we can see that there a is divide between traders. We can see that there are three categories of traders. Price action-based traders, technical indicator-based traders and traders who use both price action and technical indicators. To become a successful trader our aim is to club both price action along with technical indicator s to make high probable trades and generate good trading outcome. Technical indicators are mathematical calculations based on historic price and past volume data. Technical indicators do not provide 100 percent accurate information’s and they does not work in every market condition. So, in order to use and master technical indicators, understanding the logic behind technical indicators and type of market condition they work more productive is very prominent. Before incorporating technical indicators into trading methods, traders and investors should conduct their own research, understand the risks involved, and has to aware of the limitations of technical indicators.
Note – Technical indicators will not work in every market condition and will not provide 100 percent accurate information of an asset. Technical indicators have to be clubbed with market situation and other tools to get better outcome.
Technical indicators are tools that helps the traders in making intelligent and informed trading decisions about buying and selling stocks. Technical indicators are mathematical computations based on past price and volume data.
- Technical Indicators are mathematical tools to do Technical Analysis in stock market
- Technical indicators are mathematical calculation based on historic price and past volume data which indicate the direction in which stock price can move.
- There are so many technical indicators available, investors and traders must learn and use indicators according to their own trading style.
Types of Technical indicators.
Lagging Technical Indicator – lagging indicators are indicators that follows the price action and provides signals. lagging technical indicators provides signals only after the trend or reversal has started. Lagging indicators helps investors and traders to confirm the strength and direction of a stock or an asset.
Examples of lagging technical indicators are Moving Averages, Bollinger Bands
Leading Technical Indicator-The leading technical indicators give signals for traders before the trend begins. Leading technical indicators works productive for traders, as traders can understand a trend reversal in market before it happens. These technical indicators helps traders to make high probable trades in market.
• Examples – Stochastic Oscillator, MACD, RSI
What Do Technical Indicators Indicate?
Trend Indicator – Trend indicator helps investors and traders to confirm the trend, measure the direction and strength of the trend. For example, if moving averages are below the trading chart of an asset, it indicates the predominance of bulls and the market is in uptrend. Technical indicators provide signals like these to provide more insights for traders.
Examples – Moving Averages, MACD, Parabolic SAR
Momentum indicators indicates and provide signals to traders about the momentum in market. Momentum Indicator compares where the current market price is with the past price movement of a stock . Momentum indicator is a key tool for intraday traders to utilize quick movements in market.
Examples – Stochastic Oscillator, RSI
volatility indicators compares where the current price is in relation to where the price was in the past. Understanding the market volatility helps the traders to brace themselves from making huge losses in market.
Examples – ATR Bollinger Bands
Volume indicators provides information about the volume of an asset in the market. Measures trend strength or confirms market. The strongest trends often appear when the volume is increasing. Traders can confirm trend of an asset when it is moving along with higher volume.
Examples – Volume Chart OBV
Things To Remember
• There is no perfect indicator in market, every indicator has its own advantage and limitations.
• Try not to overuse technical indicators. Select 2-4 and study them deeply and then use effectively
• Technical indicators will not work with equal effectiveness in all market conditions. Traders have to master and learn with experience.
• Be patient and focus on learning about technical indicators. Mastering technical indicators required good efforts and patience
• After basic learning, please start selecting stocks on your own and trade with own indicators and logic rather than taking tips from telegram groups or other recommendations.