TOP 5 trading indicators for traders – Do you know which ones they are?

Why use entry and exit indicators in trading? Trading is not about that you open a position and wait for a profit. It is important to have a strategy and business plan in place. Why do indicators play a major role in trading? The answer is simple – they determine the possible entry and exit of the trade. So let’s look at the best and most used indicators.

RSI – Relative strength index indicator

It’s about the world at all the most used indicator. It can have several settings through which it gives us signals to enter the store. It is most often used at a 14-candle setting. This means that it evaluates the market situation for the last 14 candles and gives a signal accordingly. It has two zones: oversold a overbought. If the indicator is in the oversold zone, then it can be a good signal to grow, so we should buy. In the case of overbought, we should sell or open a short contract. We can also use divergence as a signal.

Divergence is characterized by the fact that it is created on the graph higher high, but on the contrary, the values ​​on the indicator begin to decline. In this case, we can see the creation of a bearish divergence, ie a signal to sell or even close the trade. It is similar in the case of bullish divergence.

MACD indicator

MACD is an indicator that consists of several other indicators. On the tradingview, we can find it in the community section in several variants. The original and at the same time the most used consists of 2 MA or even of moving average and histogram. Like RSI, it plots and gives us possible signals based on price developments on the chart over the last few days. It does not have certain exact values ​​for the oversold and overbought zones. Its values ​​can therefore rise to extreme levels. It can also be used to enter a store after creating a divergence.

MA – Moving Average

The MA indicator is also one of the most used indicators ever. It works on the principle of calculating the average price for a certain period. It can be set to any values. It is often used MA 14, 30, 60 or 141. All these settings work on the same principle. For example, MA 14 shows us the average value of an asset over the last 14 days.

Bollinger bands indicator

This indicator shows the driving force in the market. If there is high volatility, then the values ​​on the indicator go to extremely burned values. If the volatility decreases, then vice versa – the values ​​of the indicator will approach the price. You can get out of it trend reversal relatively easy to determine when to enter the market.

CCI – Comodity Channel index

It is a very similar indicator to RSI. With the difference that he doesn’t oversold a overbought zone. Divergence is best used to enter the store. Attention should be paid to the frequent burntiness of this indicator. This means that its values ​​can go in one direction for quite a long time without retracement.

Conclusion

This is just an introductory part to the indicators. In the following parts, we will explain each of them in more detail.