What are intraday trading indicators?by Pankhudi Dave Head Finance Manager
A technical trader will make all of their trading decisions based on the price charts. Every technical trader is different and will have different financial objectives, but the strategies which they use can be easily grouped in different categories. Generally, traders use different strategies that include statistical, order flow and seasonality traders. A lot of traders will incline toward indicator based trading as they believe a perfect concoction of indicators will allow them to predict the movement of the market and where it will go with precision. Any investor can go ahead with intraday trading by opening a demat account number and a lot of times, investors tend to forget to keep track of their demat account number, thus it is important for an investor to know how to check demat account number.
An intraday trading indicator is the method of trading used by traders who wish to approach the process of trading with a strategy and an indicator. An indicator manipulates price data by using a mathematical formula. The indicator will show a visual representation of the mathematical formula and price inputs. To a skilled chart reader or trader an indicator often does not reveal more than what is visible by just analyzing the price chart without any indicators. As there is a lot of information to be analyzed, an intraday trading indicator just helps in analyzing the price and provide trade signals.
One of the most important advantages of using an intraday trading indicator are that they simplify the price moves. New traders may find the simple movements of an indicator easier to interpret than the complex gyrations of the price chart. The indicators are excellent tools for learning how to spot weaknesses or strength in the price though, when a trend is weakening.
Some of the useful intraday trading indicators are listed below:
1. Moving averages:
If short term averages are exceeding the long term average, it indicates the market trend. The traders may take a buy call with specific strategies like stop loss either at the long-term moving average or retracement support, and vice versa. Intraday trading indicators can help the traders earn decent profits through intraday trading.
2. Bollinger bands:
If a stock is trading at a price below the Bollinger band lower line, there is the potential for the price to increase in the future. Traders can also choose to take a buy position. On the other hand, if the current stock price is over the upper line, traders can sell the share.
3. Momentum oscillators:
If share price has reached a historical high, and the level of oscillator is not the same as price, it is indicative of slowly decreasing demand. It also indicates the possibility of a stock price fall. The opposite is also true for stock price rise.
4. Relative strength index:
A lot of analysts recommend traders for selling the stock when the RSI touches 70 and buy recommendation as it falls to 30. But, if all the stocks may not adhere to this pattern, it is important to analyze the volatility and RSI history before making decision.
Created on Jul 15th 2019 02:41. Viewed 411 times.
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