The best primary technical indicators used by traders to analyze markets and make trading decisions include momentum, trend, volatility, and volume indicators. Here’s a list of the most important ones, categorized by type:
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✅ Trend Indicators:
Used to determine market direction (uptrend, downtrend, volatility):
1. Moving Averages
🔹 Simple (SMA) and Exponential (EMA)
Helps identify the overall trend and its intersections with price, considered entry/exit signals.
2. Moving Average Convergence Divergence (MACD)
🔹 Shows the intersections between moving averages and the momentum indicator.
Excellent for detecting trend reversals.
3. Average Directional Index (ADX)
🔹 Measures the strength of the trend (not its direction).
ADX value above 25 indicates a strong trend.
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✅ Momentum Indicators:
Used to measure the speed and strength of price movement:
4. Relative Strength Index (RSI)
🔹 Measures overbought or oversold conditions.
Above 70 = overbought, below 30 = oversold.
5. Stochastic Oscillator
🔹 Compares the closing price to the highest and lowest price over a specified period.
Used to identify reversals.
6. Rate of Change (ROC)
🔹 Measures the rate of change in price over a period.
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✅ Volatility Indicators:
Used to determine the strength of movement and fluctuations:
7. Bollinger Bands
🔹 Bands around the moving average expand and contract based on volatility.
Breakouts may indicate the beginning of a strong movement.
8. Average True Range (ATR)
🔹 Measures daily volatility.
Useful for setting stop losses based on volatility.
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✅ Volume Indicators:
Help in understanding the strength of movement:
9. Volume
🔹 Used to confirm trends.
Increased volume with price movement = trend confirmation.
10. On Balance Volume (OBV)
🔹 Connects volume with price movement.
Rising OBV indicates accumulation.
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📌 Best for beginners:
RSI
MACD
Moving Averages
Bollinger Bands
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