0Indicators
The categorisation of Indicators:
- By what they tell.
- By the data they use.
- By lagging vs leading types.
- Oscillators and Non-Oscillators.
Indicators By what they tell:
- Trend Indicators
- Momentum Indicators
- Volatility Indicators
- Volume (Market Strength) Indicators
- Support & Resistance Indicators
- Cycle Indicators
- Trend: persistence with which prices move in any direction. (sustainability)
- These indicators show how strong a trend is, whether it is weakening on strengthening.
- Examples:
- Trendlines, MAs, MACD.
- Aroon, Directional Movement.
- Envelopes & Channels.
Momentum Indicators
- High Momentum
- Slow Momentum
- Momentum: the speed at which prices move over a given time.
- Changes in momentum often lead to changes in price.
- Examples:
- Momentum (ROC), Stochastic, RSI.
- MACD
- Ultimate Oscillator. (Popular oves)
- Much slow momentum & Strong Trend.
Volatility Indicators
- Volatility: the magnitude of “day-to-day” fluctuations in prices.
- Volatility is independent of direction.
- Changes in volatility tend to lead changes in prices.
- Examples:
- VIX may help as it uses option data. A rather other Indicator in this group uses mostly prices.
- Bollinger Bands, Ketner Bands
- Standard Deviation, Standard Error.
Volume (Market Strength) Indicators
- Volume strength or lack of it for a price can often indicate future price moves.
- Examples:
- Accumulation / Distribution.
- On Balance Volume (OBV), Positive (Negative) Volume Index, Price Volume Trend (PVT).
- MA (Volume Adjusted).
- Indicator trends give an Idea of what happened at a certain time.
Support & Resistance Indicators
- Prices tend to rise/fall to certain levels and reverse: this is Support & Resistance.
- Examples:
- Andrews Pitchfork, Envelopes
- Fibonacci, Trione, Gann.
Cyclical most useful in commodities.
- Agri (Definitely)
- Base metals
Cycle Indicators
- Securities often show cyclical behaviour.
- Useful in predicting price changes.
- Examples:
- Fourier Transform,
- Detrended Price Oscillator (DPO),
- Fibonacci Time Zones.
- Pro
- Used to find out when & where it might turn in another direction.
- Corn
- To use it in a short period, e.g., Intraday – pro highly impossible.
- Indicators give warning something is going to happen.
