Best Technical indicators can be divided into different types due to different focuses. Some technical indicators focus on reflecting the trend of operation, some technical indicators focus on reflecting the change of trading volume, and some Best technical indicators study price fluctuations. This technique is also called trading strategies.
Generally speaking, we can roughly divide various technical indicators into the following categories.
1. Trend indicators
“Trend” is the core concept in the field of technical analysis and the soul of technical analysis methods. Whether it is a short-term operation or a medium-to-long-term operation, it can be better implemented only when the trend operation status is accurately interpreted. We can divide the price movement trend into an upward trend, a downward trend, and a sideways oscillation trend.
The basic characteristics of a trend are long duration and strong continuity. Once the direction of the basic trend is established, the price will continue to run along with this trend until the trend is disrupted by external factors and changes. And trend indicators are digital manifestations that reflect market trends.
Trend indicators are based on moving averages. The principle of moving averages is to reflect the changes in the average holding cost of the market and then reflect the operation of the trend. Trend indicators mainly include: Moving Average (MA), Triple Exponential Smoothing Index (TRIX), Exponential Moving Average (MACD), Momentum Index (MTM), Trend Index (DMI), Waterfall Line (PBX), etc.
2. Market indicators
Judged specifically for the stock market index of the overall situation, it uses Handicap data are different, for example, the number of stocks rose, stocks fell quantity. The main indicators of the market include the comparison of the number of gainers (A/D), the ratio of gains and losses (ADR), the vacancy index (ADL), the McLean index (MCL), etc.
3. Energy index
Mainly used to reflect the energy situation of the market rising or falling. When the market’s buying force is greater than the selling force, its stock price will show an upward trend in the corresponding time period.
On the contrary, when the market’s selling force is greater than the buying force, in the corresponding time period, its stock price will Will show a downward trend.
Using the changes in energy index lines and index values, we can better identify the changes in the strength of the long and short sides. Emotional indicators include energy-based indicators (ARBR), the relative strength index (RSI), intermediate willingness indicator (CR), psychological line (PSY), the volume ratio of rate index (VR), and the like.
4. Swing indicators
A rapid rise or fall in the short term will cause the market to be overbought or oversold in the short term. The so-called overbought state refers to the rapid consumption of buying funds in the short term due to excessively fast gains, while selling orders have increased substantially.
The oversold state is just the opposite. It refers to the rapid consumption of selling pressure due to the rapid decline in the short term, while the ability to undertake bargain hunting orders has been greatly enhanced.
Swing indicators are based on statistical theory and reflect the overbought and oversold status of the market according to the short-term price fluctuations, and then guide our operations. Swing indicators mainly include Stochastic Swing Index (KDJ), Relative Strength Index (RSI), Deviation Rate (BIAS), etc.
5. Volume indicators
Granville, a well-known American securities analyst, said: “Trading volume is the vitality of stocks, and stock price is a reflection of the trading volume. Changes in the trading volume are a precursor to changes in stock prices.”
This sentence is simple and straightforward. The important role of volume, the volume is an indicator specifically used to indicate the trend of transaction changes. Volume indicators mainly include volume (VOL), average volume line, relative volume index (VRSI), energy tide (OBV), etc.
Although there are many types of the best technical indicators, there are commonalities in their usage.
Understanding these common usages can make better use of the tools of best technical indicators to carry out firm operations, especially short-term operations. Below we take the MACD index and the stochastic swing index KDJ as examples to illustrate the common usage of the technology. The usage of other indicators is similar to this.
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