Best Indicators for Day Trading | Learn more
Day trading indicators help traders make more money. And, more specifically, for accurate predictions. Because if you have bad information about a stock you want to trade? You are sunk. You are in the red before you even start. Learning to handle a few of these indicators could have a huge impact on your trading. Let’s take a look at some of the best indicators for day trading.
Best Types of Day Trading Indicators
There are many different categories into which day trading indicators can be placed. There is delay and advance. And these two indicate where the stock is giving signals for a rise or fall in price. Leading and lagging are categories in which to place indicators. And it also helps to describe each of them.
A lagging indicator is an indicator that has given its signal after the stock has started to move. So, first the stock starts going up or down. Then the indicator comes into play and predicts if it will continue to move in that direction. A leading indicator predicts where the stock will go. And it does that before it begins its journey in both directions.
There are also trend, momentum, volatility and volume indicators. And they help to describe and sort different types of day trading indicators. Moreover, each of these measures and predicts the evolution of the price. And it does this using either trend, momentum, volatility or volume.
Overlays and oscillators are two other types of day trading indicators. Overlays use the line drawing system. And they are placed on the current chart to show how the price is expected to move from its current move. Oscillators are different. They show the same, but the prediction chart exceeds the current price shown on the chart.
Whichever best indicator you use for day trading, your odds are better than guessing.
Some of the best indicators for day trading
Squeeze Pro Indicator
The “squeeze” part of this day trading indicator signifies a surge in price. It shows you that there is a strengthening of the compression. And, the pressure must be released one day. There are three compression intensities: low, medium and high. The Squeeze Pro comes from an original indicator called the squeeze. The pro version is better at capturing more details. Thus, you are more likely to have better success with one of the best indicators for day trading.
This day trading indicator uses volume to predict a stock’s momentum. Basically, it says that if there is a drop in volume, the stock price will follow. And, if there is a jump in volume, the stock price will also act accordingly. So, find a stock with high volume compared to usual volume. And, you can make a good return on your trade.
Mean Directional Movement Index
Trends are part of life. So why not enjoy it ? Some trends last much longer than others. And some trends are much stronger than others. This day trading indicator uses direction and various other factors. And this produces a strength indicator for the trend.
It’s very useful. Because often trends come and go. So being able to tell strength on a numerical scale can mean money gained or lost. The Average Directional Movement Index also indicates whether the trend will be positive (+DI) or negative (-DI).
Keep reading for more information on the best indicators for day trading.
Bollinger Bands are used to understand whether a stock is a good or a bad value. It uses three lines, positive and negative, that go above and below the simple moving average. The upper and lower bands expand and contract as prices and volatility move. And, generally, when there is a pinch point, it means volatility will follow along with the expansion. This day trading indicator is ideal for monitoring and predicting volatility.
relative strength index
It is another of the best indicators for day trading. It has a variable number from 0 to 100. And, it “swims” back and forth between those two. What does it do? This gives the trader a good idea of whether the stock or investment is overbought or oversold. A score below 30 indicates that the investment is oversold. And as such presents a good buying opportunity.
Moving average Convergence Divergence
Moving Average Convergence Divergence is called and abbreviated as MACD. It takes two averages, puts them together and plots them on the graph. And this line shows where there may be buy or sell signals. Also, it can be used to determine if a stock is overbought or oversold. It is also useful in determining whether the price is bearish or bullish.
Exponential Moving Average
This day trading indicator uses the average of specific time sets. And then it is used to help traders predict what price will do next. It shows the strength of a stock. And, it features possible buy and sell triggers, making it one of the best indicators for day trading.
The exponential moving average moves faster than the simple moving average. By that I mean it is more precise and shows more detail in the drawn line. The simple moving average and the exponential moving average are lagging indicators. Because they follow the stock and show what it has already done.
An Italian mathematician gave his name to this day trading indicator. And in trading, they are used as percentages of a fall or rise in the stock price. And, “Fibonacci numbers” are found everywhere in nature. Not only that, but they were originally created in ancient Indian culture.
These percentages include 23.6%, 38.2%, 61.8% and 78.6%. And apparently they are not so reliable that they should depend on them. But, sometimes, when stocks reach one of these ratios? It indicates a possible reversal or maintenance of the price.
The stochastic oscillator is very similar to the relative strength index. This is because it fluctuates between 0 and 100. And anything above 80 is overbought. Also, anything below 20 is oversold. It helps traders decide whether to buy or sell, by creating signals with these numbers.
Also, it reflects the 80/20 rule. This is a rule found throughout society, nature and all areas of life. And, he says 80% of the results come from 20% of the cause.
This day trading indicator is unique. It calculates supply and demand. Then it takes that number and multiplies it by the volume. And what you get is a prediction on a trend. Basically, it tells the trader if a trend is likely to continue higher or lower, making it a great addition to this list of the best indicators for day trading.
Vanessa Adelman graduated with an interdisciplinary degree. She specialized in entrepreneurship, painting, music and cinema. Soon after, she received a writing mentorship from Mark Morgan Ford. Then she got her AWAI verification. Today, Vanessa is a freelancer in the financial direct response industry. She has been investing since 2016. In her free time, she enjoys books about money and wealth. She loves being with her boyfriend, hunting, fishing and having outdoor adventures.