Technical indicators
Indicators are an important tool in a technical trader’s toolkit. Typically these are added to a market’s price chart to provide insight into the trend, momentum, volatility and support & resistance.
There 100’s of indicators, but you don’t need to use or even know them all and your charting package will do the calculations. That said, if you use an indicator it is important you understand what it is measuring and how it is calculating its output, only then will you start to appreciate its limitations.
It is important to remember indicators are unemotional formulas.
Key Learning Points
- Technical indicators are formulas, the results are shown on or next to the price chart to enhance analysis.
- There are 100’s of indicators available, you don’t need to know them all and your charting software will do all the calculations.
- Traders use indicators to give them insights into the trend, momentum, volatility and support & resistance.
- There are two broad types of indicator – lagging and leading.
