When just getting started with day trading, interpreting what an indicator means and which ones to utilize could quickly become overwhelming. To help, here is a brief look at the basics of some of the best indicators for day trading.
First, one of the most commonly seen indicators on a professional trader’s chart is moving average. This indicator assesses overall trend direction, which provides a foundation for the analysis. It can be used to evaluate potential support and resistance levels. There are two types of moving averages to utilize: the simple moving average (SMA) and exponential moving average (EMA).
Another frequently utilized indicator is the OBV, or on-balance volume indicator. It is used to measure the flow of volume — both positive and negative — in a security over time. Doing so helps verify the strength of the trend. It also serves to validate potential breakouts and breakdowns.
Last on our list is the very useful relative strength index, or RSI. Used to help gauge momentum and trend strength, this indicator plots recent price gains versus recent price losses in a range between zero and 100. Its most basic use is to signify an overbought or oversold condition for an asset.
These examples merely scratch the surface of the top indicators that traders should have in their toolkits. If you want to learn more, please see the accompanying resource From NinjaTrader for further information.
Top Trading Indicators Toolkit from NinjaTrader, a provider of futures contract servicesThe post Day Trading Indicators: The Basics first appeared on Tech Weekly - Get the Latest & Greatest in Tech!.
