All About the Best Trading Indicators
When it comes to trading stocks, Forex, cryptocurrencies, or anything in between, one of the most important things that you need to know about are trading indicators. Now for those of you who don’t know what trading indicators are, we wouldn’t worry about it too much because we will explain this in great detail below.
After all, we are here today to provide you with a rundown of the best trading indicators out there. Keep in mind that this guide is designed more for newbies than season pros because we are here to explain today exactly what day trading is, what trading indicators, are what they can tell you, and what some of the best day trading indicators in the world are. Specifically, we’re here to provide you with the best day trading indicators for newbies.
Now, the fact of the matter is that if you are not familiar with trading indicators, then you are definitely not going to make any money. And this is true no matter if you are trading stocks, crypto currencies, forex or anything else. The simple reality is that for day trading you absolutely need to know what trading indicators are and this is what we are here to teach you right now.
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What’s Day Trading?
First and foremost, if you are a true newbie to the world of trading then you might not even know what exactly day trading is. Well, right now we are going to provide you with a basic definition of day trading as well as what some of the main features of it are.
- First off, the main point of day trading that you need to know is that it involves purchasing or selling a variety of security or assets over the course of a single day. For this reason, day trading is also known as intraday trading because everything it usually happens over the course of one day.
- Next day trading is often characterized by a large degree of technical analysis, which is of course where trading indicators come into play and moreover, it also requires a whole lot of self discipline and objectivity.
- What is also important to know about day trading is that day traders use a whole lot of leverage and various short term trading strategy to capitalize on small market movements to make profits in a single day.
What’s an Indicator?
Now that you know what exactly day trading is, it’s probably important for you to have a basic understanding of what a trading indicator is.
- First and foremost, if we were to provide you with a basic definition, a trading indicator is a set of tools or a single tool that a trader applies to a trading chart that helps to make the market much clear, thus making it easier to trade.
- The number one main purpose of any trading indicator is to provide you with a crucial set of information, such as the trend, the volume, the volatility, and more, of a certain asset or security.
- What is also important to know is that trading indicators are very precise mathematical calculations that are plotted as either dots or lines on a price chart, and these help traders to identify which trades are the best to place at any given time.
- The other important thing that you need to know is that an indicator always usually refers to a technical chart pattern that is derived from the open interest, the volume and or the price of a given asset.
What Day Trading Indicators Tell Us
Alright, so we have provided you with a basic definition of what day trading is as well as what indicators are. But with that being said, you probably still don’t know what exactly trading indicators tell you. What you need to know is that there are four crucial types or pieces of information that you can gain from any day trading indicator.
- The first type of indicator out there is the trend indicator and this is designed to tell you in which direction the market is moving. Trend indicators can also be known as also leaders because they generally move up and down between high points and low points.
- The second type of indicator out there is the volatility indicator and this is in fact one of the most important types of all, as it indicates exactly how much a price changes over a given period of time.
- The next important indicator type to know is the volume day trading indicator, which indicates how many stocks or securities are bought and sold over a specific amount of time. The volume indicator can also indicate how strong a price movement is.
- The fourth type of indicator that you need to know about is the momentum indicator, and this tells you all about how strong a trend is. A momentum indicator can also signal if there is a price reversal in the near future.
Best Trading Indicators for Newbies
Alright, so now that you have basic definitions of what day trading indicators are and what they can tell you, let’s take a quick look at some of the best trading indicators out there, particularly those that are ideal for newbies to use.
Moving Averages
One of the most important ones to talk about is the moving average or moving averages indicators. These provide you with useful information about the momentum of a market as well as trend reversals and more. It’s all about finding opportunities in the current trend.
Bollinger Bands
The next type of indicator that you should definitely know about is the bowl injure bands indicator. This is a very high quality volatility indicator that will inform you how volatile the market is when the bands widen in the gaps between them increase, then there is a lot of volatility.
Relative Strength Index
The relative strength index, or RSI for short, is another fantastic momentum indicator. This indicator features a single line that ranges from values of zero to 100, and when a stock is overbought the value will be above 70 and when it is under 30 it is oversold.
Stochastic Oscillator
This is yet another fantastic momentum indicator that you need to know about when they provide you with crucial information about the closing price of a specific security, as well as a range of prices over a certain period of time.
Commodity Channel Index
The fifth important indicator that we want to talk about quickly is the Commodity Channel Index or the CCI, and this is a fantastic trend indicator. If you are looking for a trend indicator, then this is probably the best one for you to choose.
Best Indicators for Newbies – The Bottom Line
The bottom line here is that if you can familiarize yourself with at least four indicators, one of each type, then you should have no problems making money whether you are trading stocks, forex, crypto currencies, or anything in between.