Top 3 Day Trading Indicators That Generate Profit

photo 161 150x150 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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4 Responses to “Top 3 Day Trading Indicators That Generate Profit”

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    • Hello Tina,

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  2. I have compared the RSI to Williams %r and do not see either giving me an edge.
    What setting do you like for Williams?
    I was testing rsi and 14 and Williams at 10.

  3. mark: There is absolutely no magic behind either RSI or Williams %R. Both are just mathematical formulas. People choose to use them as trading indicators, by greed and ignorance alone. After many years of investigating (and losing money), my advice is to learn the mathematics, study charts, use other data, find whatever edge there is to be found. But it must be real, not fictional.

    Anyone who believes there is an edge in using a mathematical formula that takes price as an input alone in order to “predict” future prices, is a great fool. Price can change to anything at any time, within the parameters of market circuit breakers active. It makes as much sense to pay more when the market goes up! (Hint: It’s a loser over time. It allegedly used to work better – read about “Darvas”..)

    Which period to choose is a great illusion. You can always retrofit almost any formula to provide you “answers” in hindsight. However, trying to figure out which period is “correct”, is just another foolish errand, as it will always change over time, way quicker than you can make money from it!

    What makes you think price contains the clue to where it will go next, seriously?

    By all means play with it, but try to find the real patterns in price action, volume, etc., not blindly rely on whatever an “indicator” “tells” you to do!

    For all analysis: The more datapoints you have, the better your analysis can become. There’s some mathematical proofs about that. So don’t use periods of 10 or 14, as you’d most likely drown any valid signals in noise..

    If you want a chance to earn money, you need to treat it like a business. That means benefit / cost analysis must be your fundament. Otherwise you’ll most likely lose more than you can earn! If you get “lucky”, you’ll just learn the wrong way and potentially lose more later!

    Most likely, you need to investigate as long as me just to appreciate the depth of what I’m really saying here. I’m at year 5 and still not profitable.

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