The Most Common Used Technical Indicators

Forming the base of the technical analysis, technical indicators are  mathematical calculations used by traders to forecast and confirm  short-term price trends of a security. Ignoring fundamental factors  typically used to evaluate assets such as revenue and profit, technical  indicators solely use historical trading data such as price and volume  to determine the likely direction of an asset’s price.

Types of technical indicators

Trend indicators
These measure the direction of a market trend—up trend, down trend and sideways trend.

Momentum indicators
These measure the speed of a trend and help to identify trend  reversals. They are used only as warning signals—just like the reducing  speed of a car may not end up in it stopping altogether, all reductions  in market momentum don’t end up in a trend reversal.

Volatility indicators
These indicate how uncertain a market is. Volatility is usually measured in terms of standard deviation.

Volume indicators
Volume or traded value plays an important role in generating trading  signals. Break out of trend lines or crossing the moving average  aquires greater signifi cance signifi cant when accompanied with high  volume

Technical indicators are used by traders to gain insight into the supply and demand of securities and market psychology. Together, these indicators form the basis of technical analysis. Metrics, such as trading volume, provide clues as to whether a price move will continue. In this way, indicators can be used to generate buy and sell signals. In this list, you’ll learn about seven technical indicators to add to your trading toolkit. You don’t need to use all of them, rather pick a few that you find help in making better trading decisions.