Trading Indicators for Newbies
For anybody who is just starting out in the world of trading, whether it be cryptocurrency, forex or stock market trading or anything else for that matter, what you definitely need to know all about our Bay trading indicators.
Just in case you don’t know what day trading indicators are, don’t worry about it because we will explain this in rather great detail below. The fact of the matter is that if you don’t know what trading indicators are, you are going to have a whole lot of trouble making any kind of money on any market.
Day trading indicators are all about providing you with vital information that will tell you exactly when, where and how to trade. There are various pieces of information that you can gleam from a day trading indicator. And yes, we will talk about all of this below as well, but we’re here to do today is to provide newbies with a bit of a guide on these day trading indicators.
Today we’re going to discuss what day trading is, what indicators are, how indicators work, what information they provide you with, as well as what the best indicators in the world are. Let’s get right to it and teach you everything that you need to know about day trading indicators to start making money in the real world.
What is Day or Intraday Trading?
OK, so before we can start talking about indicators for trading, it is important that you know what actual day trading is first and foremost. Day trading is often characterized by a high degree of technical analysis. It also requires a whole lot of self discipline and objectivity in order to be successful.
What is equally as important to know is that day trading is usually all about the practice of either purchasing or selling a specific security or market asset in a single day. For this reason, day trading is also known as intraday trading because everything that you do happens within the span of a single day.
What is also important to note is that day traders utilize a lot of leverage and various short term trading strategies in order to capitalize on very small price movements that occur in liquid currency and stock markets. In other words, day trading is all about placing traits that generally only last for a single day.
What is a Trading Indicator?
Alright, so now that you know what day trading is, it’s probably good for you to know what a day trading indicator is. If we were to provide you with a basic definition of an indicator, it is a tool or a set of tools that you apply to a trading chart that will help make the market more clear.
In other words, the number one main purpose of various trading indicators is to provide you with various pieces of information, such as when an asset is oversold or overbought, what the trend is like, what momentum is like volatility and more.
Furthermore, trading indicators are specific mathematical calculations that are then plotted as lines or dots on a price chart and this helps to identify certain trades that can be placed.
The other important thing for you to know here is that indicators usually refer to a technical chart pattern that comes from the price volume or the interest of a given asset. There are of course many different kinds of indicators out there, and they all tell you different things.
Four Pieces of Information That Indicators Provide
Alright, so now that we know what day trading is and what indicators are what we need to talk about, are the four different pieces of information that various day trading indicators will provide you with.
- The first type of indicator out there is the trend indicator and this will tell you in what direction the market is moving. Or in other words, what the trend is. These also may be known as oscillators as they usually move up and down between high points and low points.
- The next type of indicator out there is the momentum indicator, and this tells you what the momentum out an asset in his life or in other words, it tells you how strong a trend is. This type of indicator can also signal a reversal.
- The third type of indicator that you need to know about is the volume indicator, and these are designed to provide you with information about how much of a certain asset is being bought or sold over a specific amount of time. This indicator will also indicate how strong that price movement is.
- The fourth type of indicator that you need to know about is the volatility indicator, and this is in fact one of the most important indicators of all, as it tells you how much a price changes over a given time and if asset has high volatility then there are big price movements.
The Five Best Day Trading Indicators for Newbies
Now that you know the basics about indicators, let’s talk about the five most popular day trading indicators out there that are best used by newbies.
The Stochastic Oscillator Is a fantastic momentum indicator that provides you with information about the closing price of a stock, as well as the range of the price over a certain period of time.
The RSI, also known as the Relative Strength Index, is another great momentum indicator that features a single line with values ranging from zero to 100. This indicates if a stock is oversold or overbought, with any reading below 30, meaning that it is oversold and any reading above 70, meaning that it is overbought.
Moving averages are yet another type of momentum indicator that provides you with information not only about the momentum of a trend but also trend reversals. This type of indicator can also provide you with information about stop losses and stop loss points. This type of indicator is all about allowing you to find opportunities in the same direction as the current trend.
The CCI, also known as the Commodity Channel Index, allows traders to identify new market trends and is therefore one of the most useful trend indicators out there.
BB, also known as Bollinger Bands, is one of the best volatility indicators out there. When the market is moving and volatility is high, the bands will widen and move further apart from each other and vice versa.
Best Newbie Day Trading Indicators – Final Thoughts
When all has been said and done, as long as you know how to use a few good indicators for day trading, then you should have absolutely no problems making consistent profits on a daily basis.