4 most common indicators
Ever wondered which are the most popular indicators among traders? We have rounded up a top 4 of them for you to have a look and maybe get inspired to start using them!
1. Moving Averages
This indicator created a single flowing line which "smooths" price data and practically represents the average price of an instrument over a selected period of time. The moving average you choose to use depends on the time frame in which you are trading. For example, long-term traders normally use 50-, 100- or 200-day moving averages.
2. MACD (Moving Average Convergence Divergence)
The MACD is an oscilating indicator, mainly seen to be fluctuating above and below zero. It can be categorised as both a trend and momentum indicator. Traders using this indicator are mainly focusing on which side of zero the MACD lines are on - if they are above, the trend is likely to go up and vice versa.
3. RSI (Relative Strength Index)
Falling in the oscilator's category, the RSI shows movement that is contained between zero and 100. For example, if the long-term trend of a stock is up, a buy signal may occur when the RSI moves below 50 and then back above it, resulting in a pullback in price.
4. OBV (On-Balance Volume)
The OBV combines a plethora of volume information and compiles it into a one-line indicator. Specifically, when an instrument's price is rising, the OBV will be rising as well. On the other hand, a falling price will result in a falling OBV. In cases where the OBV is rising but the price isn't, it is likely that they latter will follow the OBV and start rising.
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