Top 3 Day Trading Indicators That Generate Profit
As a day trader, it is essential to be aware of what factors are influencing the market, what factors are having a catalytic effect on market movement and what factors other traders are focusing on. Knowledge of these factors can help you make more informed decisions regarding future trading. As day trading occurs at a fast pace, it is necessary to keep abreast with the trends. Trading indicators can help keep a track of market movement and help make better decisions, thereby leading to more profits. Here we will take a look at the top three trading indicators you can use to make the most of your trades.
Watch Out for These Day Trading Indicators
Take a look at these top day trading indicators -
1. Moving Averages – Moving averages are calculated by taking the average closing price over a set of time periods and plotting it directly on the charts. Day traders generally opt for one or five minutes working time period. Moving averages for small periods move faster than the ones with larger periods. As trends change, the moving average lines cut each other, thereby creating buying and selling signals.
2. Relative Strength Index – Relative Strength Index or the RSI indicator is among the most popular ones used today. The RSI shows the magnitude of gains as compared to the losses over a given time duration. From this data, a figure is calculated in the range of 0 to 100. If this RSI figure comes out to be over 70, a sell signal goes off, if it falls below 30, a buy signal is given.
3. Williams %R Indicator – This indicator is probably one of the best indicators around, i.e. only if you have a good idea and knowledge about how to use it. Day as well as futures traders can use this indicator to understand whether a particular stock is being oversold or overbought or when is it at the extremes. The Williams %R indicator compares the closing prices with high and low ranges across particular time durations. This value is then plotted on charts which oscillate from 0 to 100. If the value is over 80, it means that the stock is overbought and therefore should be sold. If the value falls under 20, it implies that it is oversold and therefore should be bought.
As a futures trader you could consider using a combination of these indicators to make the most of your trading opportunities.
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