Spark Global Limited Reports:
It is absolutely essential that day traders use technical analysis indicators.
It is extremely difficult to sustain profits over a short period of time based solely on fundamental data.
As a trader, you must use tools that display market data and price movements to help you make decisions.
But what is technical analysis? How can technical indicators help traders make better decisions?
What indicators would you add to your trading tools? Given that there are about 4,000 indicators, how do you pick them?
Few indicators are as powerful or useful as volume, which sets the direction of a trend, in a market with fixed volume, like stocks.
However, there are other important metrics related to volume that we will cover later in this article.
But before we go any further, let’s explain what the terms technical analysis and technical indicators actually mean.
What are technical indicators?
To understand what technical metrics are, you first need to know what technical analysis is and who is doing it.
In financial markets, technical analysis simply means studying price movements on charts. Technical analysis mainly involves the study of price charts, which is why those who do technical analysis are called “chartists”.
Technical indicators, on the other hand, are pattern-based signals derived by applying a formula to the price data of financial instruments such as stocks.
Technical indicators are mathematically calculated based on historical volume and price trends to predict future price trends and provide traders with entry and exit signals.
These signals indicate the potential price and time at which the trader will enter the trade, with the goal of profiting from the predicted price move.
Simply put, indicators are tools that help traders use history to determine the most likely path of stock prices in the future, and they form the basis of overall technical analysis.
A good knowledge of technical indicators is crucial when developing a day trading strategy. Technical indicators can be used for any financial instrument with past trading data, including stocks, commodities, currencies, futures, etc.
Pick technical indicators for the stocks traded that day
If you’re looking for day-trading stocks, correctly predicting the direction of prices can be a challenging task, but not impossible.
We know how important technical indicators are, so we’ve compiled our recommendations below as a comprehensive guide to choosing the best technical indicators for stocks that trade that day!
Volume is an important technical indicator of a stock’s liquidity, which is useful for your ability to enter and exit trades.
One of the main benefits of using volume day trading stocks is that it can help you identify price trends and chart patterns as it indicates how many people are interested in the stock.
In general, if you see high volume on the chart, it indicates more interest in the stock. Conversely, lower volumes mean less interest in the stock.
This is especially useful when stocks break out of a consolidation. The greater the volume of the breakthrough, the greater the likelihood of success of the breakthrough.
article links：Technical indicators and how to select their day trades
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