Using Technical Indicators

Technical analysis is based on the learning and analyzing technical studies and indicators

. Among various groups of technical indicators you may find indicators based on price data, volume data and advance decline data. The volume, price and advance decline quotes are the most popular types of data that are used in technical analysis. Still you may find other more exotic studies that are based on the open interest data, bid and ask quotes, etc. Some attention lately has been paid to the tick quotes as well.

As you may see that there is a good number not just a technical studies but types of quotes these studies could be applied to. Still, price based technical indicators are considered the most popular and most used in technical analysis. The price based studies itself could be divided into various different categories. You may see volatility indicators, moving average based studies, channels or envelopes, etc. In most sources and with most online chart providers you will find that all of them (technical studies) are simply divided into upper and lower. Upper ones are those that are applied directly to the price bars (candles) and which could be visible directly in the price pane. The lower ones are those that are displayed in the separate pane.

Very often when you open a chart for the first time, you could be confused when you see more than hundreds of indicators in the list which could be (in most cases) applied to volume or price quotes which in total more than two hundreds of different variations. Yet, when it comes to the reality of technical analysis an average trader would use about three, maximum five technical indicators on the regular basis.

With majority of indicators you may find that many of them repeat each other. When it comes to the choice what to use in your personal analysis, a simple recommendation could be given: use whatever you are the most familiar with. There are no bad technical indicators. Most of them would generate profitable signals.

The question is not what to use but how to use. It is required time and resources to get adjusted and become at least a little bit professional in technical analysis. You should be able to recognize different market periods and adjust your trading and settings of your indicators accordingly. It would be wrong to expect that the same settings would work all the time. So, spend some time on learning not just indicators, but how they behave in various market conditions.

by: Viktor Ka

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