Navigate the Markets: A Novice’s Guide to Understanding Three types of Trading Indicators

Did you know for many people, trading looks like a big adventure, but in reality, it is a mix of technical and economic knowledge? Identification of bear and bull, upward and downward, is enough to make money. In addition, before entering the market, first learn about the risk-return ratio and whether you are trading in a stock, crypto, or forex. These are the factors to consider before entering the trade. The trading indicators, whether you are using any platform, are divided into three categories, such as swing, trend, and energy.

Swing

The swing indicators are commonly used for the identification of overbought or oversold conditions. But why does a trader want to learn about these conditions? If he enters the market with oversold conditions, he may buy the assets at high prices, and after some time when the market goes into decline or consolidation, he falls into lost territory. Swing indicators are most suitable for short-term operations; the most popular ones are RSI and KDJ.

Trend

Smart traders always follow the trend and never resist the trend. But why is a trader’s position not oppose the trend? Because he learns by experience that only a trend can linearize the price increases and decreases over some time. The most popular indicators for trend identification are the MACD and MA. For example, the golden cross and dead cross of the 15-minute gives you the idea of half a day, the 30-minute chart gives the idea about 1 day, and the 60-minute chart gives you the idea about two days. Moreover, the smallest periods are more accurate for judgments.

Energy

This type of indicator is basically used for learning about the trading volume. By learning the volume, the traders can identify the potential of a certain project. For example, VOL indicator, the most popular one, is used to learn about the relationship between volume and price more intuitively.

Finally, any trading indicator you are using has its limitations and lags. It is better to combine multiple indicators with overall information. You will get the best results. Thanks for reading this article.