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| Chart indicators can we use for intraday/positional Trading |
Introduction
Chart indicators play very important role in intraday as well as positional or swing trades. Is It actually works? If we you depends on indicators only, it won't work. But you can combine it with price action for higher accuracy.
Which all Chart indicators should consider?
These are some of the indicators you should consider while trading.
- Pivot points
- RSI -Relative strength index
- Volume chart Analysis
- Moving averages - EMA/SMA (depends up on types of trading and time frame of the chart)
These are some of the basic indicators you must use. You can also add more as per your strategies to improve accuracy.
Pivot Points
Pivot points are used by traders in exchange for equity and goods. It is calculated based on the high, low, and closing prices of previous trading sessions, and is used to predict support and resistance levels in the current or future session. The pivot point itself is simply equal to the high and low intraday, as well as the closing price from the previous trading day. These three levels of resistance are called R1, R2, and R3 and the three levels of support are called S1, S2, and S3.The pivot point is considered one of the most accurate indicators in the market. This explains why most daytime sellers like to use it to find entry or exit points.
Relative Strength Index
It is a method used by traders to measure stock price or other securities. The basic idea of RSI is to measure a stock is up or down. RSI range in scale of 0 to 100. Less than 30 readings usually indicate that the stock has oversold, and more than 70 readings indicate that it has been overbought. Among the various useful oscillators that traders can identify, It is the most reliable and most popular indicator. Day traders use it to make a profit during intraday but some find it difficult to learn because of its rare trading features.
Volume Chart Analysis
Price per volume chart is a horizontal histogram arranged in a stock chart, showing the volume of shares traded at a certain price level. Most of the time, the price per volume histograms is found on the Y-axis and is used by intraday traders to predict support and resistance areas. Volume analysis is used by technical analysts as one of the many factors that inform their trading decisions. By analyzing volume trends in line with price movements, investors can see the importance of changes in the price of stocks. Volume chart analysis is a powerful and useful tool for determining critical price levels. A common strategy used by Intraday traders is to determine how high these levels are and then wait for the price to drop above or below those levels.
Moving Average Analysis
A Moving Average is an indicator of a stock trend by its closing price in any time frame that can help identify a trading opportunity. The moving average is calculated by adding the prices for a period of time and dividing the amount by the constant price. For example, a trader wants to calculate SMA by stock ABC by looking at the price for 5 days. A 200-day moving average is considered to be the most important in stock trading. As long as the 50-day moving average of the stock price remains above the 200-day moving average, the stock is generally considered to be in a upward trend. Moving average (MA) is a widely used technical indicator that propagates price trends by filtering "unwanted disturbance" from random price fluctuations. When prices fall on their moving averages, it may produce a trading signal for traders.
Conclusion
By Using these indicator alone cant makes you profit. But combine with chat analysis using price action and use proper SL can earn good profits in long term.
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