Trading Class

Lessons › Indicators

World 4 · 17 lessons

Indicators

Moving averages, RSI, MACD, stochastic, Bollinger Bands, ATR, VWAP, OBV, Fibonacci and volume profile, and when each one misleads.

  1. 1. What indicators really doAn indicator is math on old prices, so it can describe the market but it cannot see the future.
  2. 2. Simple moving averageA simple moving average is the plain average of the last few closes, and it smooths out the wiggles.
  3. 3. Exponential moving averageAn EMA gives the newest prices more weight, so it reacts faster than a simple average.
  4. 4. Moving averages as moving floors and ceilingsIn a strong trend, price often dips back to its moving average and bounces, like a floor that moves up.
  5. 5. Moving average crossoversWhen a fast average crosses a slow one the trend may be changing, but the signal always arrives late.
  6. 6. RSI: how strong the recent moves areRSI compares recent gains with recent losses on a scale from 0 to 100.
  7. 7. RSI divergenceWhen price makes a new high but RSI does not, the push is getting weaker.
  8. 8. MACDMACD shows the gap between a fast and a slow average, and a growing gap means the move is speeding up.
  9. 9. Stochastic oscillatorThe stochastic shows where the latest close sits inside the recent range, from 0 at the bottom to 100 at the top.
  10. 10. Bollinger Bands and the squeezeThe bands stretch when the market gets wild and squeeze when it gets quiet, and quiet often comes before a big move.
  11. 11. ATR: how far price usually movesATR tells you how far price usually moves in one candle, not which way it will go.
  12. 12. VWAP: the day's fair priceVWAP is the average price everyone paid today, weighted by how much they traded.
  13. 13. On-Balance VolumeOBV adds volume on up days and takes it away on down days, so its slope shows which days had the heavier trading.
  14. 14. Fibonacci retracementsAfter a big move, price often pulls back part of the way, and Fibonacci levels mark common places where it pauses.
  15. 15. Volume profileVolume profile shows how much traded at each price, so busy prices act like magnets and quiet prices get skipped.
  16. 16. Too many indicators: one per jobThree momentum tools saying the same thing are one opinion, not three.
  17. 17. When indicators failTrend tools fail in ranges and range tools fail in trends, so first ask what kind of market you are in.