Day traders need to process lots of information in order to trade successfully. A day trader wants to recognize trends, assess the strength of momentum either up or down, assess the likelihood of reversal, and be aware of trading volume. Each of these points of data can be assessed with day trading indicators. The best indicators for day trading are very similar no matter if you are trading commodity futures, stocks, foreign currencies, or even cryptocurrencies. When identifying a trend that could lead to profits the indicator needs to be accurate, eliminate false positives, help identify the precise moment when a trend converts to congestion and then spot clearly identify the breakout into a new profitable trend.
Best Technical Indicators for Day Trading
The best technical indicators for day trading are moving averages, Bollinger bands, the relative strength index, and the commodity channel index. Moving averages help you assess trend reversals and momentum. Bollinger bands are useful in assessing volatility. The relative strength index is a momentum indicator that tells you if an equity is overbought or oversold. And, the commodity channel index helps you recognize if the market is trending or congested.
Best Stock Indicators for Day Trading
The first stock indicator that a trader will usually consult is a trend indicator to know if the stock or entire market is going up, down, or sideways. A mean reversion indicator helps predict when a price swing will turn around again. Momentum indicators assist in evaluating selling and buying pressure. And, volume indicators tell you when the bulls or the bears have taken control of the market or the specific stock that you are day trading. Although there are more indicators, these are the best for a trader to master.
Best Non Repainting Forex Indicator for Day Trading
Non repainting indicators are typically based on data from the opening price on the current price bar. Once the bar is open the indicator stays the same until the next opening. The best non repainting Forex indicator for day trading is an auto Fibonacci indicator. It is easy for beginners to use and typically comes with alerts. However, to make the best use of this non repainting indicator the trader needs to understand how Fibonacci retracement works.
Best Crypto Indicators for Day Trading
Cryptocurrency day trades typically rely on the relative strength index, Bollinger bands, and moving averages. Because a moving average is a lagging indicator traders commonly use two or three different moving averages so that they can both assess the longer term trend and shorter term fluctuations. Once a cryptocurrency trader has mastered moving averages they will typically add a moving average convergence divergence indicator, MACD.
Day Trading RSI Indicator
The purpose of the day trading RSI indicator is to assess price change magnitude which helps tell you if an equity is overbought or oversold. The RSI is shown as an oscillator that moves between two extremes measured as zero to one hundred. A value of seventy tells you that the situation is overvalued and a value of thirty tells you that it is oversold. Traders typically set up a trend line that helps identify a horizontal channel inside of which to trade.
Day Trading Scalping Indicators
Scalpers look for profits in the small movements of the market that occur constantly. There are three day trading scalping indicators that are typically used along with two-minute charts. These are the moving average ribbon entry strategy, the relative strength/weakness exit strategy and multiple chart scalping in which the day trader adds a fifteen-minute chart to keep track of broader movements and lines to keep track of the open as well as the highs and lows in the first forty five to ninety minutes of the day trading session. Opportunities typically present themselves at support and resistance levels.
Day Trading Volume Indicators
The market is always moving up or down. Profits generally occur during moments of “enthusiasm” for an upward or downward trend. This is where day trading volume indicators can help day traders identify real trends and generate real profits. When prices are going up along with trading volume this commonly signals a genuine buying opportunity. When prices are going up but volume is decreasing this is more often an indication of a coming turnaround in price action.
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